Bank should NOT cut interest rates

The Bank of England's Monetary Policy Committee (MPC) will announce its interest rate decision today at 12pm.

My view is that it should NOT cut interest rates.

• Interest rates have already been slashed from 5 percent to a historic low of 1.5 percent and have had no real discernible effect other than helping those on tracker mortgages.
• It takes time for interest rates to feed through to the economy.
• The key issue is NOT the cost of money, BUT the availability of credit. An interest rate cut will not change this. Government needs to get the banks lending again.
• Cutting by 0.5 percent (as the City expects) will restrict monetary freedom of movement later if needed.
• Savers, the "innocent victims of Labour's recession," have been punished enough. Remember there are 60 percent more savers than borrowers in this country. Many who have retired rely on their saving's interest to supplement their income. Banks also need deposits and an interest rate cut could further disincentivise people from saving.
• Sterling has already lost a quarter to a third of its value against most currencies. This devaluation has taken place not just against currencies like the US Dollar, Euro and Yen but against currencies like the Thai Baht. How can it be that the pound has suffered against the Baht when Thailand has experienced such political and economic instability of late? An interest rate cut will further weaken Sterling. For those who argue that a weak pound will help our manufacturing base, i ask: what manufacturing base? We lost a lot of our manufacturing industry during the 1980s when Margaret Thatcher rightly restructured the inefficient and unproductive British economy, but manufacturing has gone into further decline during the 11 years of this Labour government.
• Finally, i would dispute the argument that an interest rate cut would instill confidence. It hasn't worked so far, even when the MPC slashed rates by 1.5 percent.

It's time the Bank of England took a a step back and held interest rates steady.