好色先生TV

The value of listed housebuilders dipped this morning as speculation grew that the Bank of England will have to raise interest rates further than previously expected as the latest inflation figures showed stubbornly persistent growth in prices.

Official figures released this morning showed the headline rate of CPI inflation unexpectedly remained in double figures in March, dipping only slightly from the 10.4% recorded in February to 10.1%. This is above the forecast figure of 9.7%.

The news came as the Office of National Statistics separately reported that house prices declined for the third consecutive month in February, with average prices now 拢5,000 below their November 2022 peak at 拢288,000.

City investors are now certain that following the inflation figures the Bank of England will have no choice but to raise interest rates further from its current 4.25% level at its next meeting next month, and 鈥� the highest projection since the mini budget fallout.

Golly
Less than a month ago investors were betting interest rates would peak at 4.5% - or even 4.25%.
Now they鈥檙e betting they鈥檒l hit 5% this year. Highest projected rate since mini-budget fallout.
Another consequence of unexpectedly high and stubborn inflation

鈥� Ed Conway (@EdConwaySky)

Shares in housebuilding firms, which have rallied in recent weeks on the back of reports of stronger than expected spring trading, fell back by between 0.5% and 1.7% on the news, before recovering some of the ground. Less than a month ago the markets were predicting that the Bank of England base rate would peak at 4.5% or even remain at 4.25%, according to Sky鈥檚 Ed Conway.

Further rises in the Bank鈥檚 base rate would put pressure on lenders to increase mortgage rates for home buyers, adding pressure on the housing market, which has already seen prices fall significantly since highs recorded last summer.

Professor Costas Milas, of the Management School at University of Liverpool, said it made sense to expect that the Bank鈥檚 Monetary Policy Committee (MPC) will raise interest rates further to 4.5% at its next meeting on 11 May.

He said: 鈥淚n fact, UK interest rates could potentially rise up to 4.75% by the end of 2023. This is because high public expectations of inflation, currently at 3% two-years ahead compared with the Bank鈥檚 inflation expectations of less than 1%, are putting additional pressure on current inflation through demand for higher wages.鈥�

Former Bank of England policymaker Andrew Sentance tweeted that the Bank 鈥渃ontinues to fail badly at controlling UK inflation鈥� and will 鈥渘ow need to over-correct with further rate rises.鈥� The Guardian this morning the money markets now believed there was a 97% chance of the Bank of England lifting the base rate by a quarter of a percentage point in May.

The continues to fail badly at controlling UK inflation. While inflation is falling in US and the euro area, it remains above 10 percent in the UK and may go higher next month.

鈥� Andrew Sentance (@asentance)

It is not rocket science to understand why UK inflation is so high and persistent. was slow to respond to the emerging inflation threat by raising interest rates. They will now need to over-correct with further rate rises.

鈥� Andrew Sentance (@asentance)

The news came as the ONS said UK house prices grew by 5.5% year-on-year in February, down from the 6.5% growth reported in January, consequent of a 1% drop month-on-month, or 0.3% on a seasonally adjusted basis.

The annual UK price growth figure is the lowest recorded since October 2020 in the aftermath of the first covid lockdown, and well below the 14.4% peak recorded in July last year.