Christmas Rate Cut Present On The Menu by Finance News Bulletin

Published: 17/12/07

financial growth appears to grinding to a standstill yet the central store has thus far remained unmovedAccused of being ‘wimpish' and even reckless' by a plethora of press pundits lamenting a lack of rate cut act, the Old Lady is feeling a bit bovvered chiefly with the jeers of those who lambasted the Bank's role in the Northern astound (LSE: NRK) debacle still ringing in her earsSo today's November Halifax housing survey showing a monthly price glide of 1

1%, the third successive fall and the greatest single drop since December, has provided the perfect opportunity for Merv and his merry men to raise a snook at their critics and have a slash at loan costsAnd plenty of other new signs have emerged that far above the ground street spending is suffering and that the accommodation boom is overRestaurant group Clapham House (LSE: CPH) and inn owner Regent Inns (LSE: REG) both said this week that their sales and profits are being pole-axed by a combination of higher interest rates, record personal money owing and soaring food pricesLast week, Nationwide structure Society reported 0

8% dip in November house prices, the biggest recorded thrust in more than 12 years And the Bank's own information saw October mortgage approvals plummeting 32% against last year to their lowest in nearly three existenceUK consumer confidence ebbed the most in over three years in November as higher borrowing expenses and rising prices discouraged spending, again according to Nationwide, whose pointer toppled 12 points to 86, the biggest slouch since the index was introduced in May 2004The ‘willingness to spend' gauge plummeted 14 points to 63, the least ever recorded

Which chimed with the earlier published GfK/NOP consumer self-assurance gauge, which also saw customers' willingness to make major purchases decreasing sharply and moribund to levels last seen in 1995This latter monitor dived for a fifth consecutive month in November, representative that the confidence of British shoppers has sunk to its lowest since the start of the Iraq war in 2003As has repair sector activity, according to today's CIPS/RBS purchasing managers' index, which slid to a reading of 519 in November, piercingly down on October's 53

1 and September's 567, and not distant above the 50 blot which separates an expansion in activity from a contractionBut what about worrying about inflation, which is supposed to be the major responsibility of the Bank's Monetary Policy Committee (MPC)The evidence keeps mounting

Today's CIPS/RBS review saw the ‘prices charged' equilibrium climbing to 542 from 54, the highest height since March, while input prices soared to a reading of 636 from 586 the previous month

lubricate and commodity costs, though down from their recent highs, are on the go up again In the latest version of its own Inflation Report, published as recently as the 14th November, the store admitted to being increasingly worried that customer prices might rise earlier than expectedWith an additional proviso that pay pressures are building up too Latest figures free by Income Data Services show that inflation-busting deals in the motor manufacturing fuelled a 3

5% go up in wage inflation in the three months to November, up from a one-year low of 32% in the district to October, with settlements as high as 47% at Ford and 5% at Land RoverSo there's a decent container for not cutting rates, but I believe that after all that carefully fair rhetoric from Threadneedle Street, the MPC has voted for the cut

Maybe the call from the mighty Tesco will have proved the deciding influence After all, every little helpsAnd rate cuts don't do share prices any damage, at least in the short word Not that I'm suggesting that the Bank's proximity to the metropolis's Masters of the Universe might in any way power any decision - perish the thought

- but lower loan expenses would go down rather well with those hoping for a year-end rally to increase that sub-prime damaged bonusBut rate cut or no, the economic future still looks pretty unwelcoming Maybe not quite ‘Stagflation', where inflation combines with financial stagnation, but certainly ‘Slowflation', as enlargement slows and price rises pick up© Copyright 1998-2007, The Motley Fool Limited

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