Bank of England hints at base rate cut if funding scheme fails

[AtW]

I think we have a competitor to AtW!

[cojak]

And the funding scheme will fail. Not that a base rate cut or QE will help either.

Which is great for me working in finance but bad for the real world.

They need to slash red tape. And corporation tax.

But Osbourne is not up to the job. I wonder who will replace him?

...step forward William Haig!!

[BrilloPad]

And the funding scheme will fail. Not that a base rate cut or QE will help either.

Which is great for me working in finance but bad for the real world.

They need to slash red tape. And corporation tax.

But Osbourne is not up to the job. I wonder who will replace him?

[cojak]

I didn't know she had so much influence.

You must spread some Reputation around before giving it to Gentile again.

[BrilloPad]

I think we have a competitor to AtW!

I thought admin agreed to outsource AtW's job to Bob?

[Gentile]

Taken from Mortgage Strategy:

The Bank of England’s monetary policy committee says it might look to cut base rate even further if its flagship funding scheme to get banks and building societies to lend fails.

The minutes of the MPC’s July meeting show that all nine committee members felt further economic stimulus was required in order to meet its 2 per cent inflation target in the medium term.
However, all nine members voted in favour of keeping base rate at 0.5 per cent at the present time but seven of the nine voted to increase the size of the Bank’s quantitative easing programme by £50bn to £375bn. MPC members Spencer Dale and Ben Broadbent voted to keep the stock of asset purchases at £325bn.

But the minutes reveal the MPC would consider cutting base rate from a record-low 0.5 per cent if its Funding for Lending scheme, which is designed to encourage providers to lend to SMEs and households, fails.

Under the scheme, the Bank of England will lend UK Treasury bills to lenders for up to four years for a 0.25 per cent fee per year, increasing by 0.25 per cent for each 1 per cent fall in net lending to a maximum of 1.5 per cent.
Lenders deposit collateral with the BoE as a security and, according to the Bank, can then use the Treasury bills to access money at “rates close to Bank rate”. Each lender can access up to 5 per cent of its existing stock of loans to SMEs and households and are incentivised to boost lending because every pound of additional lending would be eligible for the scheme.
The minutes say: “The arguments for and against a cut in Bank rate at this meeting were the same as before. But the impact of the FLS and other policy initiatives might, in time, alter the Committee’s assessment of the effectiveness of such a rate reduction.
“The Committee could review this option again when the impact of the FLS and other policy initiatives was more readily apparent.”

Capital Economics chief UK economist Vicky Redwood says: “The Committee said that it would only be able to judge this once the impact of the funding for lending scheme had become apparent, which could take “several months.” A rate cut therefore does not look imminent. But at the very least, we expect QE to be extended further once the current £50bn of purchases are completed in November.”

I didn't know she had so much influence.

[DimPrawn]

Well yes, I see your point.

At least AtW does add his pov to these things.

drivel

[cojak]

Well yes, I see your point.

At least AtW does add his pov to these things.

[DimPrawn]

I think we have a competitor to AtW!

Without AtW's comment?

Oh come on ....

[cojak]

I think we have a competitor to AtW!

[Martin@AS Financial]

Taken from Mortgage Strategy:

The Bank of England’s monetary policy committee says it might look to cut base rate even further if its flagship funding scheme to get banks and building societies to lend fails.

The minutes of the MPC’s July meeting show that all nine committee members felt further economic stimulus was required in order to meet its 2 per cent inflation target in the medium term.
However, all nine members voted in favour of keeping base rate at 0.5 per cent at the present time but seven of the nine voted to increase the size of the Bank’s quantitative easing programme by £50bn to £375bn. MPC members Spencer Dale and Ben Broadbent voted to keep the stock of asset purchases at £325bn.

But the minutes reveal the MPC would consider cutting base rate from a record-low 0.5 per cent if its Funding for Lending scheme, which is designed to encourage providers to lend to SMEs and households, fails.

Under the scheme, the Bank of England will lend UK Treasury bills to lenders for up to four years for a 0.25 per cent fee per year, increasing by 0.25 per cent for each 1 per cent fall in net lending to a maximum of 1.5 per cent.
Lenders deposit collateral with the BoE as a security and, according to the Bank, can then use the Treasury bills to access money at “rates close to Bank rate”. Each lender can access up to 5 per cent of its existing stock of loans to SMEs and households and are incentivised to boost lending because every pound of additional lending would be eligible for the scheme.
The minutes say: “The arguments for and against a cut in Bank rate at this meeting were the same as before. But the impact of the FLS and other policy initiatives might, in time, alter the Committee’s assessment of the effectiveness of such a rate reduction.
“The Committee could review this option again when the impact of the FLS and other policy initiatives was more readily apparent.”

Capital Economics chief UK economist Vicky Redwood says: “The Committee said that it would only be able to judge this once the impact of the funding for lending scheme had become apparent, which could take “several months.” A rate cut therefore does not look imminent. But at the very least, we expect QE to be extended further once the current £50bn of purchases are completed in November.”