Today we had the MPC meeting. This is a report that releases the results of the vote regarding the Bank of England base rate decision. There are nine members on the committee and the vote was 7-2 in favour of no change. This was inline with expectations. However, the pound did fall on the news. Some speculators were expecting a surprise to the downside, but it didn’t happen.
The British benchmark interest rate remains at 5.75%. As I wrote previously the Bank of England governor Mervyn King, feels we are at the top of of this current rate cycle and a cut could be on the cards in early 2008.
The London Interbank rate (LIBOR) rose to a two month high of 6.52%. This is the rate that banks lend money to each other. Clearly this higher rate shows a greater reluctance for banks to lend each other money, largely brought on by lingering credit concerns in the financial markets at the moment.
