Interest rates result – 6-3
In the recent meeting of the Bank of England on interest rates, six members of the Committee voted in favour of keeping bank base rate at 0.5% whilst three members voted against with Andrew Sentance preferring to increase bank rate by 50 basis points.
The MPC evidently felt that the boom in global commodity prices was still the primary driver of inflation, so took the view that increasing rates would prejudice a shaky recovery.
Subdued lending means that it is vital to the property market that the limited number of mortgages remain affordable. One opinion was that pushing up the base rate would make lenders even more nervous about borrowers’ finances and strain household budgets, which could do lasting damage to the health of the property market.
Whilst inflation remains a concern it seems that the priority is economic growth.