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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (21240)	1/13/2005 9:36:51 AM
From: mishedlo	Respond to of 116555

BoE MPC leaves repo rate unchanged at 4.75 pct Thursday, January 13, 2005 12:15:24 PM afxpress.com LONDON (AFX) - The Bank of England's rate-setting Monetary Policy Committee has left its key repo rate unchanged at 4.75 pct. There was no statement accompanying the decision, which came as no surprise. All 30 forecasters polled by AFX News expected the nine-member Monetary Policy Committee to keep borrowing costs unchanged following a raft of weak economic data, particularly in the housing market. The MPC has raised the cost of borrowing a quarter point on five occasions since November 2003 as it sought to stem inflationary pressures arising from above-trend growth and rampant consumer demand But evidence of a general economic slowdown, alongside subdued inflation data, has raised expectations that the next interest rate move may actually be down. The money markets have already begun to factor in unchanged rates for the first few months of this year, especially after the minutes of the December MPC meeting showed the nine-member panel discussed the possibility of cutting rates. Though there was unanimity about the January decision, there is a wide range of views of where interest rates will go over the rest of the year, with some economists predicting reductions while others forecast further rate hikes Jonathan Loynes, chief UK economist at Capital Economics, is one of those expecting lower rates over the year as more evidence of a housing market slowdown emerges. "We have grown more confident that there will be quite a dramatic downturn, which will have knock-on effects elsewhere," said Loynes, who is predicting three quarter point interest rate cuts this year. In particular, he noted Bank of England figures revealing that the number of mortgage approvals in November slid to their lowest level in nearly a decade. The central bank said the number of approvals during the month fell to 77,000 from 85,000 the previous month. The November total was the lowest monthly figure since September 1995, when approvals totalled 74,000 However, other economists, such as Michael Saunders at Citigroup, think these housing concerns have been way overdone Saunders, who expects rates to rise to 5.25 pct by the end of the year, thinks the MPC will be pre-emptive in its actions as the economy continues to grow above its so-called long-term rate and the labour market tightens [Is this the same citycorp that was short US bonds and long UK bonds? It's good to see that no one thinks housing is a problem although it is slowing in the US, UK, OZ, and now NZ - mish] The minutes to today's meeting will be published on Wednesday, Jan 26