You are here: Home - Saving & Banking - News -

Base Rate predicted to fall on Thursday

Written by:

Fund management company New Star has predicted a narrow 5-4 vote in favour of a quarter-point cut in the Bank of England Base Rate this week.

Simon Ward, economist at New Star, said a rate cut on Thursday 6 December was likely, but that it would not be made to offset a seizure in interbank lending, as rumoured. He explained: “Market participants are discussing reports of a massive contraction in sterling interbank lending activity since the onset of the ‘credit crunch’ in August.”

Figures from the Bank of England show the outstanding value of UK banks’ market loans to other UK banks fell from £640 billion at the end of August to £249 billion in September and £186 billion in October.

“However, the figures have been distorted by two major banking groups – apparently HBOS and Bank of Ireland – consolidating the reporting of their subsidiaries,” Ward added. “Intra-group lending between these subsidiaries was previously included in the Bank’s series for total interbank loans, but is now being netted out. According to the Bank’s statisticians, after adjusting for such ‘changes in the reporting population’ interbank lending has contracted by only £3 billion – not £454 billion – between August and October.

Related Posts


Tag Box




Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co... Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Brits clueless about retirement needs

Over half of Britons do not know how much they need to retire on, according to research from Abbey Savings.