Newspaper article The Evening Standard (London, England)

Interest Rates

Newspaper article The Evening Standard (London, England)

Interest Rates

Article excerpt

THE JOB of the Monetary Policy Committee of the Bank of England is to keep inflation within a target range, and report to the Chancellor if it fails. Nowhere in its mandate is there anything about restoring sanity to the housing market - though that is part of the reason why it has raised rates from 4 to 4.25 per cent today. Inflation is running at only 1.1 per cent on the Chancellor's chosen measure. So on the face of it, no increase in interest rates is necessary and is in fact damaging for a manufacturing sector struggling with a weak recovery and a strong pound. That said, no one with experience of the British economy over the last three or four decades could doubt that the market for most households' biggest asset was relevant to the inflation question. The most recent Halifax survey showed house prices up by 19 per cent on a year ago. Banks are pumping in record amounts of credit to fund house purchase, as ever betting that the more they lend, the more the security for their loans will be worth. …

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