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THE OUTLOOK FOR INTEREST RATES

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The minutes of the 7 March 7 monetary meeting between Eddie George, governor of the Bank of England, and chancellor...
The minutes of the 7 March 7 monetary meeting between Eddie George, governor of the Bank of England, and chancellor Kenneth Clarke, will be published on Wednesday. At this meeting interest rates were cut 0.25% to their current level of 6%.

The March cut followed similar reductions in December and January and the governor has, publicly at least, been in agreement with the chancellor about all of these moves.

However, privately George is likely to have some reservations about a loosening of monetary policy, and these worries will not have eased as evidence of a rebound in the housing sector mounts. (According to the Halifax building society, UK house prices grew 1.2% in March, continuing a rising trend that has pushed the number of households with negative equity to below one million, for the first time since 1992).

The housing market is being fuelled by the mortgage war raging between those building societies that have decided to convert to bank status and those that firmly wish to keep their mutual status. The Nationwide and Yorkshire building societies, (both committed to mutual ownership), have recently cut their standard mortgage rate by 0.25% to 6.74%, the lowest level for 30 years.
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