News
Simply Cars is launched
www.simply-cars.co.uk - the UK's newest 'Super Car Site' has been launched and is expected to soon become one of the most visited car sites in the UK. From new cars to nearly new cars to lease cars, Simply Cars can offer incredible prices and service. On your behalf, they have also negotiated special offers on a range of bespoke, tailored finance arrangements, car insurance, servicing and car accessories.
Posted: January 2005
Too soon to look for cuts…but Bank must be ready
Rates went up five times from November 2003 - as the Bank of England sought to cool the housing market and consumer debt - but have remained unchanged since August.
Recent data has indicated a slowdown in manufacturing and consumer spending, as well as in mortgage approvals. And retail sales disappointed over Christmas, with analysts putting the drop down to less consumer confidence.
Rising interest rates and the accompanying slowdown in the housing market have knocked consumers' optimism, causing a sharp fall in demand for expensive goods, according to a recent report from the British Retail Consortium. The BRC said Britain's retailers had endured their worst Christmas in a decade.
Analysts said the economy had slowed in recent months in response to rate rises but that it was difficult to gauge from the Christmas period the likely pace of activity through the summer. They said that the Bank was having to juggle the emergence of inflationary pressures, driven by a tight labour market and buoyant commodity prices, against the risk of an over-abrupt slowdown in consumer activity.
Minutes to the December UK monetary policy committee meeting revealed that some members deemed that weaker indicators for the world economy, particularly the eurozone, had increased the downside risks to the inflation outlook.
Markets seized on the phrase that those increased downside risks were "not enough to make a persuasive case for a reduction in interest rates" as a suggestion that rates may soon fall.
But many analysts, who predicts rates will remain steady throughout this year, says it is much too early to make that call. They remain dismissive of talk of a cut in rates, especially near-term, unless something goes badly awry in the domestic or global economies.
After a weak third quarter which the Bank has long said looked too weak in the official gross domestic product data, most indicators have pointed to a reacceleration to somewhere around the trend rate of growth in the final three months of last year.
“So far the evidence suggests that last year's rate increases have helped to rebalance the economy without damaging the recovery in manufacturing – said one analyst. However, he argued that should the business outlook start to deteriorate, “the Bank should stand ready to cut rates”.
In the short term, analysts say it could see the Bank keep interest rates on hold in February, rather than introduce any cut. They suggest that it's probably fair to conclude that the chance of near-term rate cuts is slightly lower and that it probably makes it less likely that there will be a big shift in policy at the February Inflation Report.
Some economists have predicted rates will drop later in the year, although others feel the Bank may still think there is a need for a rise to 5% before that happens.
The Bank remains concerned about the long-term risks posed by personal debt - which is rising at 15% a year - if economic conditions worsen.
Posted: February 2005
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