Downward house prices coupled with tight credit conditions

Posted under General by Jermaine

The Bank of England (BoE) is likely to keep interest rates on hold at per cent after what experts state will be one of the toughest decisions of recent times.

With inflation rising sharply and growth slowing markedly, opinion is sharply divided on the Bank of England’s Monetary Policy Committee about how to respond to the situation. Although last month the bulk of members opted to vote in favour of holding rates, one of them supported a cut, whereas another backed a hike.

The Monetary Policy Committee is going to study the latest growth and inflation data before arriving at a decision. No doubt that slowing economy is currently a worry! Most evidence points to the fact that annual consumer price inflation will rise above 4 per cent when July’s figure is released next week.

Soaring fuel bills and food prices drove inflation to 3.8 per cent in June, well above the government’s 2 per cent target. At the same time, activity is markedly slowing in a majority of key sectors of the British economy; business confidence is falling and downward house prices coupled with tight credit conditions have severely dented consumer spending.