FINANCIAL SERVICES companies took a leaf out of the book of oil companies yesterday by almost immediately announcing rises to interest rates applied to mortgages equal to the 0.25% hike in the base rate, while at the same time delaying raising interest paid to savers.
Continuing the indignant tone, the paper says savers have been “left in the cold”, particularly since most have yet to benefit from November’s base rate increase, let alone yesterday’s.
The Daily Telegraph states house prices are to blame for yesterday’s news, and that the statements accompanying the Bank’s decision are due to a shift in focus from simply limiting general inflation to becoming more active in targeting house price inflation.
The Telegraph also says economists it spoke to “said there appeared to be little inflation in the pipeline.”
The Scotsman disagrees, saying that the evidence is overwhelming that the economy is picking up speed and the MPC should be expected to nip excessive inflation in the bud through further rate hikes in the spring and summer.
The paper writes, however, that the appreciation in sterling likely to follow a more restrictive monetary policy is anything but good news for the UK’s exporters.
”But the MPC has consistently put greater stress on the high street, homebuyers and the services sector than manufacturing when deciding what to do with base rates,” The Scotsman says.
Meanwhile, pundits are taking slightly different views on where rates could go by the year end: The Times says 5%, The Telegraph says 4.5%, while The Scotsman falls between the two.
CURRUPTION IN French banking circles got another airing overnight as the former second-in-command of Credit Lyonnais Dominique Bazy agreed to plead guilty to charges brought by the US Federal Reserve over the bank’s failed takeover of Executive Life.
It was the failure of the US life insurer that brought down Bazy and his former boss Jean Peyrelevade, in what became one of France’s worst ever banking scandals.
Lst year the French government was forced to intervene to settle out of court with US prosecutors to the tune of $770m, the FT says, but the former executives were specifically excluded from that deal.
Bazy must now pay a $250,000 fine and cannot travel to the US for three years.
Peyrelevade meanwhile is crying foul, accusing French president Jacques Chirac of lending a helping hand to Francois Pinault, whose family firm PPR helped out Chirac out of a sticky political situation by acquiring Executive Life from Credit Lyonnais.IFAonline
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