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Don\'t Bank on a Base Rate Cut

3rd March 2009 | back to article listings BACK    print this article PRINT

Stuart Law, Chief Executive of Assetz comments ahead of the Bank's interest rate decision this week:

"Whilst the majority of commentators believe the Bank of England will drop base rates a further half point down to the lowest on record at 0.5%, I don't believe this is a clear cut case. We are seeing evidence that base rate falls are still having a positive effect for home buyers and investors, but the Bank may give up on further cuts in favour of quantitative easing.

"The new 'cash' created by the Government will initially buy corporate bonds. This market has done badly from a capital point of view over the last year, as investors have shunned the risk of lending money to corporates, resulting in a drop in value. However, those seeking income have done well by investing recently in corporate bonds, with yields of 6.5% plus. This will not continue and the weight of money coming out of the Bank of England will drive up corporate bond prices and drive yields down."

 

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4678.html. Alternatively, please see our full press release archive.

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