Stronger signals that interest rates are nearing their peaks
The UK economy has avoided recession so far, but growth is minimal. GDP rose by just 0.2% in the three months to June. However, some are pointing to this weak economic performance to suggest that the rapid rise in interest rates over the last 18 months is starting to have an effect – especially as inflation continues to slide back from the peaks hit late last year.
Official inflation data showed that the CPI measure fell back to 6.8% in July, down from a peak of 11.1% in October last year. Core inflation, which strips out food and energy costs, is not falling however, causing more caution about the how entrenched rising prices are.
The Bank of England’s MPC has raised the base at nearly every opportunity it has had had over the last 18 months as it has moved to tackle inflation, but recent comments from the Bank of England Governor suggest that the base rate may be nearing a peak. But the Governor also indicated that rates could stay higher for longer. In other words, falling inflation will not necessarily be quickly followed by a falling base rate. The central bank will want to make sure that inflation is firmly under control before it makes any such moves.
Even so, the Governor’s comments were enough the trim gilt rates. We expect the base rate to fall back in 2024.
The information provided in this report is the sole property of Cluttons LLP and provides basic information and not legal advice. It must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Cluttons LLP. The information contained in this report has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. Cluttons LLP does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.
Agile and highly responsive in our approach we are ideally placed to advise you on buying, selling, leasing, or re-gearing your London and UK offices as well as other types of commercial and…
Commercial valuation
Our team of RICS registered valuers brings a wealth of experience advising property owners and lenders across the UK. We are experts in the broad range of commercial properties, undertaking…
Residential estate agency
When it comes to selling or letting your home, we are driven to make it stand out from the ordinary. It’s our purpose to help you make the most of its value and guide you with great consideration…
Residential valuation
Our residential valuation team of RICS registered valuers specialises in the provision of valuations for a broad range of clients including property companies, a wide range of banks, lenders, funds…