ALL EYES are on the City today in this morning's national newspapers, as the industry waits to see whether the Bank of England's Monetary Policy Committee increases the base interest rate, as expected.
The Times suggests the Bank of England risks "confusing financial markets if it fails today to deliver a quarter-point rise in interest rates" as there have already been several not so subtle hints from officials a rate is inevitable, given the continuing boom in house prices and no sign of a slowdown in consumer spending.
MPC members have insisted that the Bank will not set rates to target house prices directly, says the Times.But the sustained strength of the market still reinforces the case for the MPC to move to cool the twin property and consumer booms.
ABBEY HAS already pre-empted the rate rise, says the Guardian, and increased the interest rate on its three-year fixed-rate mortgage to 5.09%.
Angus Porter, the bank's customer director, is quoted as saying: "With predictions that there may be another increase in the Bank of England base rate soon, more and more people are drawn towards fixed-rate mortgages, knowing their monthly mortgage repayments will remain unchanged, regardless of any move in the base rate. Our rates are still competitive."
THE DAILY TELEGRAPH has highlighted comments made yesterday by Aviva officials who warned a recovery in the long-term savings market is still at least a year away.
As well as looking at the company’s financial affairs, Gary Withers criticised the government for "regulatory and political interference in the market", arguing authorities focused too much on the industry's "past failings".
Withers said: "We are driving through policy and regulatory changes which are not desperately helpful. The UK is still stuck in the negative mindset of what has gone wrong in the past. The savings gap in this country is a serious issue and needs to be addressed but we have recently seen signs that the Government is willing to listen to what we have been saying."
AND THE GOVERNMENT has been criticised for "crowding the private sector out" of the tax-free savings market, continues the Times.
In an address to the Building Societies Association annual meeting, Brian Morris, head of savings, called for the Treasury to allow building societies to compete fairly with NS&I, which allows savers to shelter more than £90,000 from the taxman at National Savings & Investments (NS&I), compared with less than a tenth of that sum tax-free through banks, buildings societies and other savings vehicles.
This follows a recent move at the NS&I to increase the limit for premium bonds investments from £20,000 to £30,000 and lift the annual limit for savings certificates at NS&I by £5,000.IFAonline
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