In fact it suggested the Bank of England's next move may be to raise rates

Posted by admin · · Jump to comments

In fact, it suggested the Bank of England's next move may be to raise rates."Monetary and fiscal policy have provided a stable macroeconomic environment to date. However the current surge in house prices creates a dilemma for monetary policy as to whether to act before any potential bubble becomes a risk to macroeconomic stability," the OECD said.John Butler, UK economist at HSBC, said this statement was startling and went against expectations in the UK."The market is not even thinking about a rise. The OECD is saying that the Bank of England is likely to raise rates and all that's holding it off is the global picture. They are arguing against interest rate cuts, saying this would further fuel house prices," Mr Butler said.The OECD provided some backing to Mr Brown's policies, saying the large increases in public expenditure that have been announced are not expected to break his fiscal rules.

Mr Butler noted that the OECD appeared to support the Government's view that large increases in public-sector wages could jeopardise progress.. Another wave of job cuts has swept the City as a series of investment banks and brokerages announced fresh redundancies ahead of the Christmas bonus season. They are expected to be concentrated in its US brokerage operations, with more than 1,400 staff likely to lose their jobs in this area.The bank is also making some staff from its London office redundant, where it employs 4,700 bankers and other staff. Morgan Stanley is also understood to be cutting back in its leveraged financing division, an area which has not been popular with clients since the stock market slumped.When the latest round of job cuts is completed by the end of the fourth quarter, Morgan Stanley will had shaved its headcount from its peak of 63,000 in the first quarter of 2001 by 13 per cent.ING, the Netherlands-based bank, said it was cutting 1,000 jobs in its wholesale banking business to reduce costs amid difficult markets.ING has already shed 700 staff from its wholesale banking unit. ING said it had taken a €128m restructuring provision for the third quarter to cover the cost of the lay-offs and other restructuring costs.Meanwhile ABN Amro said it wanted to shrink its global workforce by 500.

The bank said it was not embarking on a redundancy programme and would achieve the reduction as a general rule by not replacing members of staff who left.Other parts of the financial services industry showed signs of feeling the pinch. Gerrard, the stockbroking firm which is now part of Old Mutual, is preparing to make some of its 1,200 UK staff redundant but would not say how many employees would go.Old Mutual is in the middle of a restructuring programme in Britain. It has reduced its headcount in the past 18 months to 1,200 from 1,800.Morley, the fund management business owned by the UK's largest insurer, Aviva, has also quietly laid off a handful of staff, in its first attempt to cut costs to address the fallout in investment management business.In total more than 60,000 employees have been laid off from Wall Street and the City since the market peaked in early 2000.. GUS, the retail giant, surprised the City by unveiling the Â£900m acquisition of Homebase, the do-it-yourself chain, from its private equity owner. GUS, the retail giant, surprised the City yesterday by unveiling the Â£900m acquisition of Homebase, the do-it-yourself chain, from its private equity owner. The deal, which overshadowed a rise in profits at GUS, was hailed as a coup for Permira, the venture capital group that spearheaded the purchase of the DIY retailer from J Sainsbury two years ago for Â£750m.GUS plans to run Homebase, Britain's third-biggest DIY chain, as part of its Argos retail group, which will have combined sales of Â£6bn a year and operating profits of Â£340m. "Homebase is a very important logical expansion of all we have been doing in Argos retail," Sir Victor Blank, GUS's chairman said.