Bank of England Stops Printing Money

The Bank of England’s Monetary Policy Committee has temporarily stopped printing extra money, but has indicated that if the economy does seem to be tipping back into recession, it is ready to print more money.

This may be good news for mortgage holders and very bad news for savers. The split in decision on the committee, which has been running the quantitative easing program since March of last year, is a response to the fear the inflation figures are running away from the 2% target the Government has laid down for it.

But this split decision could also mean that they will be reluctant to raise the record low 0.5% interest rates that have been with us for a long time. Great news for those borrowers who are on low rate standard rate mortgages, not so good for many others.

The problem is that whilst the base rates are low many banks are paying little or no interest on many accounts. Added to this that inflation last month was recorded at almost 3% and expected to rise again this month and those that have savings in the bank are actually losing money at a rate of 2% - 3% a year. Add to this that the interest that they do earn is probably taxed and savers are losing a lot of cash each month.

In fact, with some Standard Variable Rates as low as 2.5%, if interest figures are not brought quickly into check by the Bank of England, it could turn out that there could be cases when those effectively making money are those on very good mortgage offers, at least on paper.

It was announced in the week that certain banks are refusing to allow some borrowers to take advantage of the best deals, wanting to move them to other deals instead. It is probably calculations such as this that have instigated such moves.

Many pension funds are also feeling the pinch of the current climate and are begging the Government to step in and provide the necessary stimulus that they require to get back into the black. But with an Election looming in around 3 months, the Government is unlikely to want to make any moves that could be seen as either admitting a failing economy or that could be unpopular with the general public and could cost them votes.

But the Bank of England has also made it clear that it too is looking to the Government to start taking steps to deal with the public purse, otherwise measures would have to be tighter than have been seen. The suggestion is that the signal to be read by the Bank halting half way through the Quantitative Easing program is that they are waiting to see how the Government sorts out its own mess before deciding what should be done next.

6th February 2010

2010
February
26th House Prices Falling Again
11th Bank of England Spreads A Forecast Of Gloom
3rd Halifax Refusing Cheap Deals To Home Movers
January
20th The pound has reached a 4 month high against the Euro
20th UK Banks Might Face Insurance Levy
13th Credit Card Intest Rates Up
11th 6% Have Paid Mortgage With Plastic
8th Bank May Be Forced To Raise Interest Rates
7th Interest Rates Frozen
6th Iceland Cold On Payback
4th Virgin Money Might Attempt To Buy ’Good’ Northern Rock
2009
December
30th Land Registry Shows 0.9% House Price Increase
22nd OFT Throw In The Towel
21st OFT To Abandon Bank Charges Case?
18th OFT To Announce Next Bank Charges Step
16th Halifax Customers Vote With Their Feet Over Bank Charges
November
25th OFT Loses Bank Charges Battle
25th More Families Investing In Safes
23rd The End Of The Cheque
October
12th First Time Buyers Suffer Compared To Existing Mortgage Holders
September
30th Is The 90% Mortgage Making A Comeback?
29th Summer Mortgage Increases Halted
23rd Summer Jump In Mortgage Lending
18th Mortgage Lending Down
16th Inflation at 5 year low
16th More Premium Bond Winners
10th Interest Rates Held
6th Buyers Beware Of Stamp Duty Freeze
2nd Negative Net Borowing
June
13th Less mortgages for first time buyers
January
8th Record Low For Base Rates
2008
December
5th Base Rate Chopped, More Expected
1st RBS Pledge on Arrears
1st Base Rate To 2%?
1st Mortgage Lending Crashes
November
28th House Prices Fall 10%
21st Home Sales Rise
21st 1.3m Homeowners Stuck
12th Tracker Rates Rising
6th Lowest Rates In 53 Years
5th Pressure for 1% Cut
October
20th Libor Rate Falls
14th No Change For Libor Rate
8th Bank Of England Shock Rate Cut
2nd Pressure For Rate Cut
September
30th 10% of Mortgage Deals Axed
30th Libor Rate Jumps
29th Lloyds Latest To Raise Its Rates
29th Mortgage Lending Drops 98%
26th More Banks Raise Cost Of Borrowing
26th Rate Cut On The Horizon
25th HSBC Charges First Time Buyers More
23rd Rate Cut Was On The Horizon
22nd Banking Chaos Could Increase Mortgages
18th Lloyds To Take Over HBOS
15th More Housing Rescue Fears
11th Barratt Insures House Prices
9th Estate Agents Sell 1 Home Per Week
8th Rate Cuts Could Come...