| UK
Interest Rate: 5.25%
UK
Interest Rates Forecast: Further 0.25% rise expected
in May
Most
analysts are playing a game of wait-and-see at present,
with various business organisations like the British
Chambers of Commerce taking advantage of the wait before
May's interest rate decision to set
out their case for holding interest rates at their present
levels.
Interest
Rates Failing To Cause Price Drop
March
saw UK average house prices rise for
the 17th consecutive month – a statistic that
may cause some concern to members of the Bank of England's
MPC.
Calming
the housing market has been one of
the underlying aims of the MPC's inflation-busting
interest rate rises. The combination of strong
demand, tight supply and interest rates which remain
historically low has prevented this, however, and house
prices have continued to rise in several areas of the
UK.
Ed
Stansfield, property economist at Capital Economics,
believes that the motivating factors that lead people
to move house have been underestimated. "People
lose sight of the fact that moving home is a very emotional
business," he said, commenting that the idea that
the interest rate rises seen so far would bring the
market to a halt is "overly pessimistic".
David
Stubbs, senior economist at RICS still believes that
supply and demand will continue to drive the market,
and that with continued shortage of supply in many areas,
the UK is "a million miles away from falling house
prices".
Falling
Price Pressure on Manufacturers
The
proportion of the UK's manufacturers who are looking
to raise their prices has fallen substantially in the
last quarter, according to a new survey from the BCC.
This found that whereas in the final quarter of 2006,
39 per cent of UK manufacturers were under pressure
to raise prices, in the first quarter of 2007, this
proportion was only 23 per cent.
This
should come as good news to those opposed to any further
increase in interest rates,
as it might contribute to the beginning of a reduction
in inflationary pressures.
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