It came as little surprise to anyone that the Bank of England (BoE) once again decided to keep the interest rate at an all time low of 0.5%.

The BoE Monetary Policy Committee (MPC) also decided to keep the Quantitative Easing (QE) programme at the status quo of £200 billion.

This was despite the level of inflation now running well above the BoE target of 2% with fears that it could reach 4% this year.

Last month the MPC was split three ways on the way ahead. More QE needed (Posen), interest rate rise needed (Sentance) and keep things as they are (the rest). But in future if the BoE forecast of inflation somehow sorting itself out with no interference from them does not come about, then Sentance may gain a following.

But the inaction so far points to current inflation being nothing to do with a recovering economy. If it was then the MPC would act to keep the lid on any possible overheating by raising rates. That they haven't taken this route points more to a recognition of stagflation and that it is more important to live with inflation and low rates to get the economy moving.

Mortgage tracker deals (2-5 years) seem to be running somewhere between 2%-3% above bank base rate for low LTV rates, but at 3%-4% above for the higher LTV loans. Both of those would be eye watering if the bank base rate was to revert to anything like its historical average of about 5%. That is something for anyone taking out a mortgage now or in the near future to seriously consider.

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