24 September 2008
Customers taking out secured loans were offered a glimmer of hope recently when Bank of England Deputy Governor Sir John Gieve suggested interest rates may be too high. Speaking to the Family Office Leadership Summit in London, he said tighter credit conditions and falling house prices could have a deflationary effect, allowing the cost of borrowing to be brought down. "While we must remain vigilant for any signs of inflation expectations drifting upwards, the news on that front is encouraging," he remarked. And he added that the US government's multi-billion dollar rescue package is likely to restore confidence to banking system. According to economists, Mr Gieve's comments are an indication that he may vote for a cut in base rates at the next meeting of the monetary policy committee. The group held rates at 5% this month. Their next decision will be announced on October 9th following a two-day meeting. Inflation is currently running at 4.7%.