Thu 8 May 2008
Bank of England ignores industry’s plea to cut interest rates
The Bank of England has ignored the industry’s pleas for an interest rate cut, in keeping the rate static at 5% as part of a plan to keep inflation at bay.The HBF has been calling for a 0.5% interest rate cut, which would, when allied to the £50 billion liquidity scheme announced in April by the Bank of England, restore both lender and buyer confidence, to get the housing market moving again.
“We believe more immediate action is needed to reduce the impact of a potential market downturn on the wider economy and on the government’s ambitious housing targets,” said Stewart Baseley, the HBF’s executive chairman.
The base rate hold is likely to stimulate the housing market into further decline, added Neil Chegwidden, head of residential research at Jones Lang LaSalle: “We can expect UK mainstream house price falls of between 7 and 9% this year, with some quarterly rises during 2009. But we believe it would take widespread job losses to send house prices significantly below these levels.”
The Consumer Prices Index showed inflation stood at 2.5% in March, well ahead of the government’s 2% target.
Posted by Marc Da-Silva
in Bank of England, Jones Lang LaSalle (JLL), News, Stewart Baseley on Thu 8 May 2008