Released on: November 29, 2007, 8:24 am

Press Release Author: Jim watson

Industry: Real Estate

Press Release Summary: The time between the announcement of the monthly decision by
the Bank of England\'s rate-setting monetary policy committee (MPC) and the
publication of the minutes is frequently filled with speculation about how the
committee might have voted

Press Release Body: The time between the announcement of the monthly decision by the
Bank of England\'s rate-setting monetary policy committee (MPC) and the publication
of the minutes is frequently filled with speculation about how the committee might
have voted. Partly this may be due to the fact that nature abhors a vacuum, but when
there is widespread expectation of forthcoming changes in rates the significance of
the discussion increases.

Such a situation was certainly the case during this month\'s hiatus. Between the
announcement of the decision on November 8th and the release of the minutes today,
the November inflation report was published, indicating that interest rate cuts
would soon be on the way as inflation was expected to hit its target in the
long-term even if the present 5.75 per cent level was trimmed.

With commentators speculating about two or even three cuts in the next year, the
question was no longer one of if but one of when. Thus the voting figures and
reasoning contained in the minutes took on a particular significance. A clear vote
to hold would suggest the next cut was some way off. A close vote would be
interpreted as a sign that a change was imminent.

Following all the speculation, the minutes indicated a vote cast seven to two in
favour of the status quo, with John Gieve joining October\'s odd man out David
Blanchflower in arguing that, as the minutes put it: \"Waiting for further evidence
before cutting interest rates towards a more neutral level risked making the
slowdown sharper and longer than it needed to be to bring inflation back to target.\"
However, the majority were concerned at the potential inflationary effects of oil
and food prices, while believing that there was still time to wait for more data to
emerge.

The interpretation of these figures and the minutes has varied, giving no clear
signal to those with variable-rate mortgages about what may happen to their
repayments, or those hoping for a cut to boost the flagging housing market.

Martin Slaney, an analyst at GFT Global Markets, said as much when he told the BBC:
\"The minutes do little to dispel uncertainty over the timing of when a rate cut will
come,\" But he added his own prediction that rates \"will be kept on hold for a few
more months\" rather than being cut before the year is out.

This differed from the view of Ian Kernoghan, an economist with Royal London Asset
Management, who suggested an early Christmas present was not unlikely. He said:
\"Last week\'s Inflation Report opened the door for a rate cut at some point and the
latest set of MPC Minutes raises the prospect that this will come as early as next
month.\"

Earlier this year, many economists were tipping rates to rise higher than 5.75 per
cent. Since the credit crunch struck such predictions were replaced by the
expectation that the next move would be down. The November Inflation report put some
flesh on those bones, but given the divergent analysis of the experts, the issue of
the timing of the first cut may be no clearer at all today than it was yesterday.

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