Finally some semblance of interest has been re-ignited in the Bank of England’s Monetary Policy Committee meetings, after the whispers of a potential further rate cut, yes cut, together with more Quantitative Easing, has gathered momentum.
Although the whispers have not graduated to full on shouts just yet, apart from a strong message sent by the International Monetary Fund’s managing director, Christine Lagarde, the pressure seems to be growing.
Today the MPC resisted the urge to change anything, although by all accounts the last meeting was delicately balanced over the need to return to the printing presses and add to the £325 billion already printed.
Whether we do eventually see a Base Rate at 0.25% or even 0% in due course depends on whether the UK economy and events in Europe begin to dig their way out of the proverbial abyss.
At present, the rain in Spain stays mainly, well everywhere, as Euro leaders run around like headless chickens trying to sort out what to do next. Greece is a sideshow compared to the potential expensive scenario of having to bail out the 4th largest Euro Economy.
In the UK, much hung on the outcome of the latest Markit/CIPS purchasing managers’ index (PMI) survey in the service sector which, if it had followed the drop shown in the same survey for manufacturing, showing a marked decrease in confidence, would have spurred the Bank of England into action.
However, the survey actually showed that UK services grew at a steady pace in May, higher than many feared and seems to have done enough to keep the Bank from acting further for now at least.
Whatever happens, we are approaching a summer period where many will hope the feel good factor generated by the Jubilee will be amplified by a good Euro Championship, (you never know!) and a sensational Olympics.
Already we have seen the difference that a little bit of warm weather can bring together with a flood of tourists for the Jubilee. A survey from the British Retail Consortium (BRC) showed that UK retail sales values were up 1.3% on a same-stores basis from May last year.
Meanwhile Halifax has noted that house prices have risen slightly in April and May, increasing by 0.5%. The three-month on three-month measure showed a 0.8% rise in prices by the end of May.
Whilst in general property prices are not expected to change dramatically, either up or down, over the coming months, the influx of cash from foreign buyers in London continues unabated. This “safe haven” status looks set to continue for the foreseeable future.
So, it’s not all bad then and we are even seeing a slight easing of mortgage rates at the moment which is welcome. How long this lasts remains to be seen, but until then God Save The Queen and Come on England!