4 Aug

Cut rates, says former minister

Cut rates, says former minister

Former cabinet minister John Redwood has argued that the Bank of England should change tack on monetary policy if it wants to see the mortgage market recover.

Mr Redwood, who was secretary of state for Wales in John Major's government before resigning to challenge for the party leadership, argued in City AM that it was impossible to simultaneously bring inflation down and boost the market, observing that house prices were being pushed downwards by interest rate policy.

He also commented: "The Bank of England needs to realise that keeping interest rates too high is preventing a housing recovery," adding that it is also "damaging" for the mortgage market that nationalised Northern Rock is not being allowed to increase its mortgage book.

The former minister's views are not the only ones suggesting a base rate cut should come soon.

Discussing the state of the economy as the first anniversary of the start of the credit crunch is marked, banking analyst at MF Global Mamoun Tazi told the Independent the speed at which the UK economy will bounce back "depends on whether the government puts in place a package to stimulate the economy and cut interest rates".

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