Bank Eases Up Interest Rates

Friday, August 6 2004

The Bank of England’s Monetary Policy Commission stuck to their policy of only increasing interest rates by quarter of a percent at a time yesterday, as they pushed the rate up by 0.25% for the second month in a row. The Bank of England’s repo rate now stands at 4.75%.

The raise came after speculation from various economic advisers that only a half point increase would be enough to rein in consumer spending and cool the property market.

Meanwhile, the Halifax reported 22.1% annual inflation in the housing market on Wednesday, with the average UK house price rising above the £160,000 mark for the first time. According to the Halifax, the average price now stands at £161,831.

However the Halifax’s research showed a moderation in buyer interest and an increase in the number of new sales instructions, indicating that the market could still cool.

Commenting on the figures, Martin Ellis, Chief Economist at the Halifax, said: ‘House prices grew by 1.3% in July, which was very similar to June’s 1.2% rise. The house price gains in June and July represent a clear step down from the 2.0% plus monthly price growth seen, on average, in the preceding 6 months. These figures, along with other housing indicators, suggest that the market may be slowing.’

Bank of England