Mixed data begs question: what will happen to interest rates tomorrow?

Tomorrow the Bank of England’s (BoE) Monetary Policy Committee is expected to announce an end to the quantitative easing measures as economic data released yesterday shows mixed information.

The BoE released data showing that December gave surprise results of a drop of around 1,000 home loans in the level of mortgage lending – the first fall since November last year – and also a reduction in money supply.

In contrast, a survey showed British factory activity had increased in January at the fastest rate for fifteen years.

Last quarter, figures showed the UK had shown a slight growth – the official sign of the end of a recession.

With some economic signs showing signs of recovery and yet others showing signs of a second dip, some economic experts are predicting that the BoE will hold both interest rates and pause the quantitative easing programme when it has its monthly meeting this week.

With mortgage lending down, some experts are saying this reinforces their thoughts that house prices are due to suffer another decrease this year. This may be good news for first time buyers preparing to get their foot on the housing ladder for the first time, but bad news for those already in or close to negative equity. Mortgage advisors will be busy either way.



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