Inflation Report reinforces ongoing low rate expectations
Posted on 15 February 2013 by
This week’s Quarterly Inflation Report from the Bank of England added little in terms of inflation expectations to the statement issued by The Bank on Thursday last week. However, it did provide considerable meat on the bone and in particular the fact that 1% of the CPI increase is due to "administered and regulated rates" such as green taxes on utility bills. Without such Government self imposed own goals CPI would be broadly on target!
It appears Mark Carney's influence is already present months before he takes up his appointment as Governor, with greater transparency from The Bank already apparent, plus projections over a longer term. The Quarterly Inflation Report not only provided further evidence that Bank Rate is unlikely to rise for well over two years but also made the point that "average quoted household loan rates are likely to fall further," even without further falls in funding costs.
This is good news for homeowners with a mortgage or those planning to buy a property. For many such people mortgage payments will be the largest, or one of the largest, monthly payments and so the ongoing historically low monthly payments resulting from current and forecast interest rates will mitigate, and in many cases fully compensate for, the impact of other cost pressures on household finances.
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