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The Bank of England paused for breath today amid further signs that the housing market is on the mend and the economy is pulling out of recession.
The Bank's monetary policy committee (MPC) left interest rates at 0.5% for a sixth month and gave no further boost to its £175 billion quantitative easing programme.
It followed last month's shock decision to pump an extra £50 billion into the recession-hit economy through the controversial scheme.
The no-change decision today came after mortgage lender Halifax said house prices rose for a second month in a row in August.
A shortage of homes for sale helped push the average cost of a UK property up 0.8% to £160,973, broadly in line with where prices were at the end of last year.
Brigid O'Leary, senior economist at the Royal Institution of Chartered Surveyors, said: “It's not clear that the current period of increasing house prices will be sustainable over the medium term.
“Over the next 12 to 18 months, the housing market will still be challenged by a fitful economic recovery, and any eventual increases in interest rates could leave potential buyers, as well as existing owners, in a vulnerable position.”
Dr Helen Hill, policy director at the London Chamber of Commerce and Industry, said: “The MPC was right to keep interest rates on hold while businesses strive to pull out of the recession. We don't envisage the Bank making any changes to rates until the signs of an economic upturn become unmistakable.”
Reader views (2)
So the BOE's "stuff the savers" policy grinds on. Fat chance now of prudent people spending their dwindling capital on big ticket items to ease Britain's festering hordes of profligate HOUSEBUYING chavs out of recession.
- Ted, London, 11/09/2009 07:54
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The BoE is stoking up tomorrows financial crisis by artificially using taxpayer borrowing to artificially deflate the cost of capital in the UK.
- Brian Edmonds, Farnham UK, 10/09/2009 16:30
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