Friday, March 30, 2007

RICS predicts April rate rise

Another interest rate hike is likely despite uncertainty over inflation picture - RICS

Another rate hike is likely despite uncertainty over inflation picture.. Although inflation is likely to fall during the next six months, and wage rises have remained subdued, RICS still expect interest rates to rise to 5.5% in May. While there remains uncertainty over the prospects for price changes in the UK in 2008 and beyond, the fear of higher inflationary pressure from abroad and increased price setting power of firms at home, will convince policy makers that interest rates need to rise one more time.

Posted by converted lurker @ 06:18 PM (603 views)
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4 thoughts on “RICS predicts April rate rise

  • “Although inflation is likely to fall during the next six months…….”

    Why is inflation likely to fall during the next six months?
    Because policymakers would like it to?

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  • I don’t understand why the talk is that rates will go up in May, and not April – Surely if the MPC no they are going to have to increase rates wouldn’t it be much better to do this sooner rather than later. I would have thought it better to raise rates now, certainly as oil prices seem to be going up again which is going to put pressure on them – if for some reason Inflation does start to drop then IR can always be lowered again. – Anyhow given the waythe MPC have reacted in recent years it would not come as a shock if they lowered rates next week. Does anyone know a good reason why they will wait until May?

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  • p.o.o.r said:
    >>Does anyone know a good reason why they will wait until May?

    The reason I believe is because their quarterly inflation report is released in May. The quarterly reports have more detail and often give a clearer view of the status of the economy.
    Before you say shouldn’t it be June if it’s quarterly then yes probably but it is Feb, May, Aug, Nov.

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  • But Denzil, they raised in January, in advance of releasing the inflation report, so it could well happen again. We can but hope…

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