Remortgages are going to remain for the time being at low rates as the Bank of England’s Monetary Policy Committee (MPC) left their standard base interest rate at 0.5 per cent for another month during their September meeting.  The minutes of that meeting were recently released and revealed that while interest rates may not change soon there will likely be more quantitative easing (QE) to help boost the economy.  This had been an expectation but the minutes showed that this is definitely in deep consideration of the MPC.

Malcolm Barr, JP Morgan, was recently quoted as to his interpretation and opinion on the MPC September minutes.  Mr. Barr remarked, “Although we were surprised that the minutes of the September MPC meeting did not show anyone joining Adam Posen's vote for more QE, the text leaves no doubt that the committee is moving toward that action. A few quotes suffice to make the point – there is no need for picking up on subtleties because the message is overt.

“The September minutes also saw the committee discuss the options on the table to provide more stimulus. It listed asset purchases, changing the maturity of asset held, a Bank rate below 0.5%, and explicit guidance on Bank rate beyond the judgments explained in the inflation report. We continue to think that movement along any of these lines is unlikely at this stage. Rather, we would expect gilt purchases to be extended by a further £100bn before they came into play. By the time that has happened, we suspect policy initiatives designed to ease credit availability for small and medium sized firms will have moved up the agenda. These were not listed by the MPC as an option "at this juncture", and we suspect that majority on the MPC are not as keen as Adam Posen to be the source of such efforts. Even so, our best guess is that the MPC would be supportive of such actions if proposed by the coalition government.

“Little in the discussion of the data and events was particularly eye catching: the key developments being the downside news on activity globally during the month, intensifying financial stresses, and the sharp fall in the services PMI. As we highlighted in a research note this week, weak pay growth and stability in most measures of medium-term inflation expectations are encouraging the MPC in its assessment that inflation pressures are temporary, even if there are ‘risks associated with easing policy during a period of sustained above-target inflation and there were concerns about how quickly inflation would fall back to target’.”