THE Bank of England kept interest rates steady at its monthly meeting yesterday but robust figures from the housing market suggested it could have to raise rates again before the end of the year.
The Bank’s Monetary Policy Committee (MPC) fulfilled expectations that it would peg rates at 4.75 per cent after last month’s surprise quarter-point rise. But debate continues over whether it will need to increase rates again in November to keep inflation on track.
Philip Shaw, an economist at Investec, said: “Base rates remain likely to rise again. It would take some very poor news on the economy, very good news on inflation or both to stave off another increase.”
Data from Halifax, the nation’s largest mortgage lender, underscored the case for action. House prices rose by 1 per cent over the month, the strongest rise since March.But the data showed that annual house price inflation fell to 8.2 per cent in the three months to August from 8.8 per cent in the three months to July and a peak of 9.4 per cent in the three months to June.
Opinion was divided over whether the increase in rates last month had failed to affect the market substantially.
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Kelvin Davidson, of Capital Economics, said that many buyers would have decided to purchase, and probably agreed a price, “before the [August] rate rise was delivered, suggesting that it will be another two or three months before its impact can be properly assessed”.