Interest Rate Hike by Bank of England Could Be Put Off by Anchoring Actions of FPC
The Monetary Policy Committee (MPC) of the Bank of England is responsible for setting the interest rate for the best of the UK economy. It had been the opinion of most economists that the MPC would surely hike the interest rate in the first quarter of the new year, but that does not now seem likely. The global economy has stalled and for some countries their economy is hurting badly. This has an impact on the decisions of the MPC along with many other domestic factors.
A relatively new committee, the Financial Policy Committee (FPC), within the Bank of England can restrict particular UK markets such as the residential and commercial property markets and their imposed restrictions would lessen the requirement that the MPC take action. The FPC can also force banks to hold more capital which could tighten lending.
The ripple effect by decisions made by the FPC for insuring financial stability could push the MPC to hold off on any interest rate hikes past the forecasted expectations. For some experts, the hold could extend the need of increasing the standard base rate until 2017.
For hopeful homebuyers and homeowners seeking remortgages, it doesn’t mean it is a time to sit back and relax because the MPC won’t be raising rates anytime soon. Instead, it could be the best time to grab a deal. Lenders are competitive and they are relatively relaxed in lending compared to some expectations of tightening. With time on their side, borrowers can shop around for the best remortgage or mortgage deal and know that once they find the top one for their needs there is less of a need to rush and worry during the process.