24 October 2007
One of the nine-member panel which decides the base interest rate in the UK has signalled that an impending rate cut is unlikely.
Speaking yesterday, member of the Bank of England's Monetary Policy Committee (MPC), Kate Barker, said: "It is not immediately obvious why recent developments in financial markets should prove the trigger for such a [rate] change."
Many analysts expect the cut thanks to the ongoing turbulence in the global financial markets caused by the US sub-prime loans crisis.
Banks were left exposed when a rash of American home-owners defaulted on their mortgages earlier this summer, leading to a financial market chain-reaction which has left financial institutions less willing to lend to each other.
This rise in inter-bank borrowing rates appears to have had a direct impact on rates for personal loans and mortgages.
A report released today by analysts at Datamonitor cited by news agency Reuters shows a 4% overall rise in loan rates, as UK consumers find it harder to get credit on the high street.
An interest rate cut might have the effect of easing this pressure by making paying loans back cheaper - although Ms Barker's comments make this possibility less likely.
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