Renewed warnings from the Bank of England over attempts by companies to push up prices and other risks of inflation in the medium term, yesterday reinforced the City's belief interest rates will rise again before summer, says the Times .
Hawkish comments to MPs from Mervyn King, the Bank’s governor, and other members of its Monetary Policy Committee (MPC), left economists predicting base rates are set to rise again soon, probably by May.
King hardened expectations of a new increase in borrowing costs when he told the Commons Treasury Committee there was “no clear reason” for the MPC to change the assessment it set out in last month’s quarterly Inflation Report.
The analysis showed consumer price inflation would fall back from present high levels to the Bank’s 2% target over a two-year period, but only if the MPC raised base rates to 5.5% during the second quarter.
The governor tempered his remarks by noting recent economic data had been “mixed”, with “volatile” consumer spending data, and “some signs that the housing market is beginning to slow”, says the paper.
ANNUAL HOUSE price inflation dipped below 10% in March amid tentative signs of a cooling market, reports the Guardian.
Nationwide said the value of a typical home in the UK increased by 0.4% during the month, down from the 0.6% recorded in the previous month.
The average cost of a house in the UK now stands at £177,083 - £15,000 higher than the same time a year ago – representing a hike of £41 for every day of the year.
Annual inflation slipped back into single figures - recorded at 9.3% in March - after breaking through the 10% mark in February.
Despite showing a degree of buoyancy over the last few months, Nationwide said the underlying trend indicated a softening property market in the face of recent interest rate rises.
HBOS IS to launch a Christmas savings account aimed at low income households - the very part of the population hit by the Farepak collapse, says the Scotsman.
The bank provided the loan facility to European Home Retail (EHR), the parent company of Farepak, and its decision not to extend the overdraft facility to EHR has been blamed for the collapse of Farepak last October, which resulted in around 150,000 people losing about £35m.
The Halifax Christmas Savings Account was announced yesterday, on the eve of the publication of the Farepak review and financial inclusion strategy by the Treasury.
But HBOS denied it is cashing in on the people who lost out in the Farepak debacle.
A spokesman said: "We believe we did the right thing and lessons have been learned. We're taking steps to make sure a savings account is available to low-income households that is tailored for those saving towards Christmas."
The account, which will launch in May, can be opened with £5 and has a minimum savings threshold of £5 a month. The maximum that can be saved is £600 a year and the rate of interest is 5.2%.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7034 2680 or email [email protected].IFAonline
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