While most within the industry were expecting rates to remain the same during November, some were naturally hoping for a cut given the current market conditions.
When surveyed by Pink Home Loans, 95 per cent of brokers revealed they had few doubts that rates would stick at 5.75 per cent.
However David Bexon, managing director of SmartNewHomes.com, believes this month's decision to be 'extremely short sighted'. He said: “There is still time next month for the MPC to reverse this decision and I urge them to do so.”
Ray Boulger of John Charcol agreed, adding: “The minutes of last month’s MPC meeting spelt out that the committee had seriously considered cutting Bank Rate, although the eventual vote was not close at 8 – 1. Today’s no change fails to look beyond the probable short-term increase in the CPI back above the target level of 2%, to the dangers the global economy faces.
"A cut of 0.25 per cent today would at least have pushed 3 month Libor back down to about 6 per cent. It would also have started to redress the Bank of England’s policy mistakes, as outlined in last month’s Financial Stability Report, in dealing with the credit crunch.
“The MPC's failure to cut rates today means that the opportunity to mitigate against the potentially serious problems building up in the banking system has been lost.”
While most commentators are predicting that a cut in December would be foolish due to cash-strapped consumers finally being given the bit of breathing space they so crave, David Austin, managing director of Property For Life thinks it's about time for a cut, and December is the opportune moment for it.
He said: “We believe that a quarter percent cut before Christmas is needed to boost consumer confidence and stimulate spending. Consumer debt and repossessions continue to rise and a further increase in interest rates would place unnecessary pressure on homeowners and investors."
Not everyone has responded so negatively to the announcement though.
Trevor Williams, Cheltenham & Gloucester's chief economist, said that today was clearly not the day for a cut: “Although it is true that economic growth may have peaked in the last quarter and is slowing in the current one, there is still some way to go before the MPC would need to wield the knife on base rates. Money supply is still growing, along with strong labour market conditions and continuing robust economic growth.
"Equally, with early signs that the economy is set to weaken in 2008 and price inflation still comfortably below target, the Bank was never really likely to raise rates. The next move will almost certainly be down, but it’s safe to say there won’t be any change until February at the earliest."
Jonathan Cornell, managing director at Hamptons International Mortgages, called the freeze 'prudent' whilst Colin Bell, director at InterBay Commercial said that, at least on the face of it, he believes that this latest decision appears to be correct. “These are interesting times for the MPC. If you remove the credit crunch crisis from the equation, then there is no reason to reduce rates.
"The economy is showing good growth, inflation is in control and unemployment is stable. However, there is no doubt that rates will need to be reduced as we progress through 2008 and these reductions will always be welcomed."
When asked, the general consensus is that rates should creep back to 5.25 per cent by the end of next year, however Richard Dingwall-Smith, chief economist at Scottish Widows Investment Partnership (SWIP) believes this magic number will be hit a lot sooner than twelve months' time.
"In our view, the UK economy is now at a turning point," he said. "With tighter financial conditions set to bite on the housing market, the prospect is that financial services will become much less of a driver of overall growth. Indeed recent survey data suggest that the economy has now started to soften - we expect to see the official interest rate trimmed to 5.25 per cent within six months."
