Interest held at 5%
Before last month’s rate freeze the Home Builders Federation called for a half point cut to 4.5%, to avoid the slowdown in the housing market. Since then property prices have slipped and in the housebuilding business thousands of jobs have been lost.
Yet despite all this inflationary pressures remain with the figure currently at 3.3%, still above Gordon Brown’s target figure of 2%. Costs to business are increasing and economic growth is expected to be less than 2% this year.
This puts pressure on the Bank of England to potentially increase interest as a mechanism to control inflation and yet last month the MPC’s decision not to raise interest rates was unanimous.
But business groups are still calling upon the BoE to be ready to cut rates further should there be any further signs of an economic slowdown whilst rumours persist of a recession ahead.