Other Posts by Michael Aglony

• So what's next after Base Rate is held at 0.5% again?
• Data indicates property market progress!
• Improved Funding for landlords
• At last - Funding for HMOs, Freehold Conversions & Limited Companies returns! 23.07.2009
• Increase in fixed rates as "perceived" inflationary pressures start to build. 22.06.2009
• Survey's report increases in house prices - 15.05.2009
• Base Rate stays at 0.5% for a second month - 07.05.2009
• Base Rate remains unchanged at 0.5% - 09.04.2009
• As the market bottoms out, now is the time to secure that property bargain - 03.04.2009
• The Turner Review may impact Buy to Let warns Lord Turner
• Now that Base rate has dropped to 0.5% it's time to fix!
• Northern Rock resumes lending - what will be its impact?
• Will everyone benefit from the 0.5% Base Rate cut?
• Bank Base Rate now seems set for 0.5% cut on Thursday
• B&B appoint Mortgages for Business for early repayment charge clients
• Will Base Rate stay below 5% in 2009?
• It's all about cashflow!
• Mortgage Express are waiving all Early Repayment Charges!
• SWAP rates and LIBOR rates on the move in 2009 - 13.01.2009
• Bank of England Base Rate cut by 0.5%. How will this effect Buy to Let? - 08.01.2009
• Market awaits Year End movements at Banks
• Merry Christmas and here's to a better 2009!
• 3 month LIBOR continues to ease slowly - 16.12.2008
• LIBOR, SWAP rates, base rate and interest rates - we're seeing history being made - 11.12.2008
• Base Rate reduced to 2%
• The return of Buy to Let as a commercial transaction

 Print

It looks like Bank of England Base Rate could drop to 1% next week

By Michael Aglony

The next MPC meeting on 4 February with its announcement on 5 February is heading towards a 0.5% cut in Bank of England Base Rate (BBR) down to 1%.

The prevailing view is that 1% will be the last of the cuts in BBR and thereafter the Government and BoE will adopt other tactics including quantitative easing although Danny Blanchflower who sits on the MPC still believes that rates could yet go as low as 0.25% or 0.5%. His view isn't shared by the SWAP markets where 1 year SWAP rates have gone up slightly to 1.71% and 3 year SWAP is at 2.50% (27 Jan 2009).

The premium between BBR and LIBOR rate is only reducing slowly and stands at 68bps ie 2.18%. Whilst there are good technical reasons restricting downward movement, the margin this close to the next announcement is indicative of a 0.5% reduction.

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