Interest rates to stay low - reckons Kent firm
Interest rates are likely to stay low for some time following
the Bank of England’s decision to hold them at 0.5 per cent for the
11th month in a row.
That’s the view of Ian Spreadbury of Fidelity International,
based in Hildenborough, who said he shared the Monetary Policy
Committee expectations of slow growth and low inflation - despite a
sharp 2.9 per cent rise last month - for some time.
He said: "This latest decision reinforces my expectations that
we will experience a slow growth, low inflation environment going
forward. Interest rates have again been held at 0.5 per cent and I
expect them to remain at low levels for some time to come."
One factor against raising rates too soon was the extra cost it
would place on servicing the UK’s high debt levels which, warned Mr
Spreadbury, could "potentially place an economic recovery in
jeopardy".
The MPC also decided to "pause" the injection of more money into
the economy by buying government bonds – so-called quantitative
easing – on top of the £200bn it has already spent on printing
money.
Mr Spreadbury said there was a lot of cash sitting on the
sidelines, particularly in Asia, for investment in bonds. And banks
were likely to be big buyers of Gilts as a result of higher
liquidity requirements.
Property consulting firm Jones Lang LaSalle, which manages Kent
Science Park in Sittingbourne, said it did not expect the Bank to
raise interest rates in the short term.
However, James Thomas, head of residential development and
investment, warned that despite recent rises, house prices remain
vulnerable to a "mild relapse" during 2010. "The demand for housing
remains subdued as mortgage backed households remain weighed down
by constrained financing conditions, a weak labour market and
continuing uncertainty around the economic recovery and forthcoming
elections," he said.
Meanwhile, the Housing Forum has warned that banks and other
reluctant mortgage lenders are preventing the house building
industry from moving towards recovery.
Shelagh Grant, chief executive, said: "It is clear that as we
start to work our way out of the recession, there is still a potent
combination of factors affecting the house building industry. If
the industry is to meet housing targets, more achievable deposits
and realistic rates will have to be adopted."
Friday, February 05 2010