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MPC RAISE INTEREST RATES TO 5.75%

5th July 2007 | back to article listings BACK    print this article PRINT

Commenting on the Monetary Policy Committee’s decision to raise interest rates to 5.75%, Stuart Law, Managing Director of Assetz says:

"Although the latest rise was widely predicted by economists, many of us believed it was entirely unnecessary in light of recent inflation figures. 


"Once again, the Bank has applied more pressure on borrowers in its own attempt to communicate a firm control before the quarterly Inflation Report in August, despite inflation having already shown signs of a significant slowdown in recent months.  Mervyn King himself has acknowledged that a sharp fall is likely before the end of the year, and Assetz analysis suggests inflation will drop back to 2% as early as September.


"Demand is such in this country that growth in the housing market will continue to be robust in spite of the latest rise, and will continue at 7-10% for the year.  A further raise however would perhaps be one too far, and could begin to slow growth in the residential market.


"First-time buyers are the biggest losers again, continually priced out of the market and forced to rent for longer periods.  While an increasing rental demand favours buy-to-let investors, the rising costs are now persuading them to look away from residential lets for higher yielding properties in the commercial and holiday sectors."

 

 

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/3609.html. Alternatively, please see our full press release archive.

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