HSBC or Homebuilders: who are you listening to?
Today, the Home Builders Federation came out to ask Mervyn King and the BoE to cut rates 50 beeps. The Telegraph reports:
Housebuilders are urging the Bank of England to cut interest rates when it makes its monthly decision tomorrow, warning that the market is slowing at a faster rate than it did during the housing slump of the early 1990s.
The Home Builders Federation said a 0.5pc cut in the borrowing rate was now “imperative” if an unprecedented economic slowdown is to be avoided.
It accused the Bank, which is widely expected to hold rates at 5pc tomorrow, of underestimating the gravity of the current threat to the UK economy.
–The Telegraph, 4 Jun 2008
I’m sorry but these people are self-interested parties who are looking to continue riding the gravy train. Those days are well and truly over.
Just last week, the head of HSBC, Michael Geoghegan, said he thinks the BoE should raise interest rates to combat inflation. That’s a very different view — one I share.
So, who are you going to listen to: HSBC or homebuilders?
I think the BoE will hold rates, but after Mervyn King’s about-face on Northern Rock, people think they might be able to swing him round to their way of thinking. One never knows.
They might as well ask him for a new Hummer for every HBF member while they’re at it.
Nick
Northern Rock was a one-off IMHO. The fact the consequences of it for the government keep getting worse and worse (for example the EU just had a go at it yesterday) means they have little appetite for repeating the trick.
There’s also no money left to allow it.
Nick