A "Christmas Crunch"
17 Nov 07

Christmas is coming! But it may not be the best Christmas for consumers as they are predicted to hold back this year.

The London money markets froze again this week since August’s credit crisis as the three month Libor shot up to two month highs above 6.34%. Higher borrowing costs caused by the credit squeeze could contribute to a slowing consumer slowdown.

Some now think that the Bank of England will lower rates to 5.5% when they meet again in December, but I still predict a cut in January. Things are still uncertain, as we do not yet know exactly what is happening yet.

This speculation about lower rates next month sent the pound to a new four year low against the euro of 71.52p. It also dropped to $2.042 against the dollar.

Links:
Market freeze to sour festivities – The Telegraph (16 Nov 07)