Factors Which will Influence Future Interest Rates
- House prices are starting to fall. The Halifax reported a 0.6% fall last month. Annual house price inflation is still in double figures. But, if this monthly fall is not a one off it will significantly change the state of the economy and make future inflation
- The Cost of loans is rising. Especially cost of loans to non - financial corporates. This is a result of increased risk associated with loans and the malfunctioning credit market.
- Slowdown in Consumer Spending. - Retailers have been reporting slower sales.
- Strong Pound and Euro - The Pound and Euro are strong against its main trading partners, although, it is not certain how much of a problem this is going to be.
- US slowdown - Will it spread to Europe and the UK?
- Will Cost Push inflation rise as a result of increased commodity prices?
- At the moment UK inflation is close to the Bank's CPI inflation target of 2%
- EU interest rates were also kept steady at 4%