Further pressure is mounting on the Bank of England not to raise the base rate, with Nationwide claiming that consumer confidence is likely to have a big impact on the Monetary Policy Committee's (MpC) decision.
The Nationwide Consumer Confidence Report released ahead of the Mpc meeting tomorrow claims while consumers feel confident about the current economic climate fears about the future stability of the economy have risen sharply.
The downturn in confidence continues a three months fall and Nationwide says as a result it does not believe the Mpc will raise rates tomorrow. The lender adds the effect of the last five interest rate rises are still being felt and the subsequent slowing of house price inflation has left consumers feeling more cautious.
House price inflation is now running at a three month average of just 0.2% says the lender, compared to 1.7% 12 months ago. Nationwide also says consumers expect house prices to rise by 1.7% over the next 6 months – down from 2.7% last month.
Stuart Bernau, executive director at Nationwide, says there has been a noticeable change of sentiment on the economy in the last month, with people now appearing to feel much more uncertain about the future.
“With house prices cooling, consumers seem to be feeling less optimistic, tightening their belts and looking to reduce their debts rather than spend on the high street. People seem particularly uncertain about the future of the economy, jobs and income and it could be that the next couple of months are critical to the future direction of the economy," he adds.
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