Has inflation peaked?
After hitting a recent high of just over 5% the central rate of inflation in UK looks set to fall markedly after reaching a 16 year high. This more than any other factor should allow the Bank of England to reduce interest rates later this week, something which many investment markets have already factored in to the situation. This is not a time for the bank to be overly cautious and there is a need to take a brave decision on Thursday.
The weight of expectation in consumer, business and political circles has increased dramatically over the last few weeks and it would be a major shock if the bank where not to take any notice of this. If they were to surprise on the downside and leave rates unchanged this could lead to a substantial fall in the UK stock market. All areas of the UK economy are literally crying out for interest-rate reductions as severe and as soon as possible.
While the current role of interest-rates in the refloating of the UK economy is not as prominent as it has been in the past it should act as a useful fillip to consumer confidence. Let us hope that for once the Bank of England throws caution to the wind and listens to the business arena.
Share this..
Related stories
Bank Of England jumps to the defence of Mervyn King
Mervyn King, the Gov of the Bank of England, has today received support from his employers with regards to suggestions he is "looking to talk down the pound". This is a subject we have covered over the last few days, with certain comments from Mervyn King appearing to have been interpreted by the currency markets in a rather depressing manner. However, Mervyn King believes that his comments had be...
Read MoreHSBC flexes its muscles with $1.3 loan from parent
Who needs the governments new loan facility? Who needs to dilute shareholder interests?
HSBC Holdings has flexed its muscles in the UK by handing over a $1.3 billion cash injection to its UK subsidiary HSBC Bank. The move was made overnight with the minimum of fuss, no big headlines and a business as usual sign on the door. While the UK operations of HSBC Holdings are in no way st...
UK public turns against postal staff
A recent survey by the Daily Telegraph has shown that support for the Communication Workers Union, representing the UK postal service workers, is ebbing away as UK consumers and UK businesses become ever more concerned about the run-up to Christmas. Slowly but surely the Royal Mail management appears to be winning the PR war although this is a battle which nobody can win because ultimately the lon...
Read MoreLloyds bank finally reveals terms of rights issue
Lloyds bank has today revealed the terms of its record £13.5 billion rights issue with the new shares being offered a discount of 59.5% to the prevailing share price. The rights issue shares will be priced at 37p compared to a price of 91p in the marketplace. This is a reflection of the enormity of the rights issue and the concessions which the company has been forced to give in order to receive...
Read MoreECB May Raise Interest Rates In The Short Term
While the Bank of England confirmed what the majority of observers had forecast, no change in the UK base rate, it seems that the ECB may have different plans. As the City was digesting the no change announcement by the Bank of England the ECB were talking about the increased threat of inflation and a possible rise in European interest rates over the short to medium term.
Even thou...