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Calls for cut in UK rates go unanswered

The cry for interest rate cuts in the UK has now reached fever pitch with all areas of the economy suffering in some shape or form. While it is more of a confidence issue which has put us in this mess, with Christmas coming it looks as though the future is bleak for many this year. The retail trade is expecting its worst festive period for many years, banks are literally having to bail each other out and the leisure sector has all but died a death.

There is no doubt that an interest rate reduction would give some hope to consumers, although as yet it would not loosen the troubles in the money markets, but inflation is still a slight concern. As the price of oil plummeted to below $100 a barrel there were hopes the worst was over and inflation was coming down, but a recent spike in the price (although not to anywhere near recent highs) has alarmed the advisers at the Bank of England.

Do the authorities take a chance that inflation is on the way down and reduce rates or do they need to protect the value of the pound in your pocket and wait until inflation is back to more comfortable levels?

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