What I have never understood, the BoE raises rates in an instant on some recently published monthly published statistic but, when considering lowering rates, cite the two year inflation outlook and why they can't lower rates.
How have they failed to see the build or inflationary pressures which become apparent with the recently published statistics that they missed in the preceding months?
Now, every published report is now showing there is going to be a marked slowdown during 2008 but for some inexplicable reason, they still fail to act and lower rates.
Even their own two year outlook shows inflation will be below target but recent oil and other price pressures are being cited as reasons not to change rates.
In summary, what are they exactly for?

JOHN DOE, LONDON, UK

The BoE should leave rates as they are until Feb/March at least and not pander to political pressure. Oil and food price inflation needs to settle down before they can even think about rate cuts. And the slowdown/correction in house prices is exactly what the BoE was trying to achieve anyway. If a few BuyToLetter's sell-up and provide some first time buyers with properties then what could be wrong with that?

George, Aylesbury,

I have read many articles criticising Bank of England's decision to cut the base rate by 25 basis points in mid-2005, however realistically think that this, far from stimulating the economy on its own, also sent out the message that possibly rates were heading lower still (evidently turning out to be completely wrong).

To the general public who are mostly unawares as to what the BOE's main remit is regarding (amongst other things) controlling the inflation outlook two years ahead, uneducated housebuyers may have taken this as a signal to continue the debt 'binge'.

I also believe that with the benefit of hindsight, even in the absence of the August 2005 rate cut, the subsequent strong growth in financial services, (particularly in London) would have ensured a continued house price boom however maybe not quite to the levels we are faced with currently.

2008 is clearly going to make for an interesting year with a more subdued consumer and far less mortgage equity withdrawal.

Chris Newell, Colchester, England

The public spending cupboard is bare, since Chancellor Brown squandered all the money on unreformed public services. A fiscal response to weak growth there can be none - if anything, Chancellor Darling will have to rein in spending, thus reinforcing the coming downturn.

Richard, Kidderminster, England

The Bank of England has made a couple of mistakes, the first was when it reduced the interest rate to 4.50 from 4.75. The biggest mistake was the 5 susequent rate increases, never giving enough time for the intial increments to take effect. At lot of households in the UK were on short term fixed rates for thier mortgages and the increases were not going to be felt until these expired. There are thousands of households during Nov/Dec coming off low 2 year fixed rates, these are facing huge increases in their mortgage payments. Combine this with those coming off sub prime fixed & tracker rates. Many who were forced to take a mortgage with a sub prime lender will find thier mortgage is no longer affordable and face respossesion.

Dave, Sale, Cheshire

The government has been running an on balance sheet
deficit of 38 Billion pounds a year during the good years, what's going to happen now when growth starts falling.
Labour cannot manage the economy and never could, this
government will end as the 1979 one did in chaos.

The good years should have been used for some extra spending in Health, Education & Defence, and for selected
tax cuts to help the working poor, to cut inheritance tax to 10p
and continued capital gains and corporation tax cuts. This
would have left us more competitive to avoid a slow down.

With taxes going up, government and personal debt massively
increased, it will take a very good chancellor to get Britain
back on the road.

Roger, Weymouth, England

i believe the biggest mistake, and i don,t know if you can blame anyone body was;
the letting of house price inflation explode, everyone talked about it but did nothing to stop it.
rabbits & headlights come to mind

michael mckeary, paisley, scotland

Well it was perfectly obvious what was going to happen. A Ponzi economy made up of excessive public sector, and selling oer-priced houses to each other (as so use as a de- facto ATM) was never a recipe for a firm future. Throw in a credit bubble and we are now on the downhill run. How fast and how far will we sink is what we should be asking ourselves.

The govt are worried and will no doubt inflate like mad. But banks don't care about base rates and are raising borrowing quickly to remain solvent. Asset devaluation has started (notably property). Buy gold if you want to protect your wealth.

jonathan tedd, marlow, UK

Not really convinced by this.
It is easy to determine when the US is in trouble - that's when their analysts and politicos start pointing the finger elsewhere and predicting dire outcomes for the EU/Japan/China/UK etc.
And with such a heavy US presence in the City and media we are now suffering this chatter/backdraft. Don't overestimate the sagacity of our home-grown punditry.
However, despite Brown's best (incompetant) efforts, the economy and the Brit consumer both remain surprisingly resilient.

John Maynard, Cranbrook, Kent

Brown's chickens are coming home to roost with a vengance.

He can't blame the Conseravtives for this.

Frank Leader, Bournemouth,

Although many would like to think otherwise the BOE and their interest rates can only nudge the market rather than decide its course. What comes up must come down and, as the Fed are currently discovering, lower rates is by no means a surefire way of stopping a desparately overdue decline.

Paul, Brighton,

The Bank of England's real mistake was the 25 basis points CUT in the Base Rate from 4.75% to 4.5% in August 2005. This allowed the economy to expand too rapidly leading to a further escalation in property prices that had only just begun to cool slightly resulting in rather more rate hikes than might otherwise have been necessary.

CoogarUK, Dorchester,

The bank of England made a mistake by continuing raising interest rates without leaving a little more time to see the results, they do take time to trickle through. The extent of the rate rises that we are feeling now, would not be so worrying if the final one or even two rises had been delayed,for a few months. It is not an exact science more a feel. The bank has shown it does not have the feel.if they had got it right there would not be all this talk about gloom and doon

Michael, Truro, uk