We all heard that Mark Carney, Governor of the Bank of England, feels that inflation is \u2018in the system\u2019 even though the headline figures are at an all time low.<\/p>\n
His concern is derived from the tightening of the Labour Market that is pushing wage costs northwards particularly in the private sector and the impact of this on inflation. Has he read the latest Treasury figures since last month when there was a slight rise in unemployment although it could be a ‘blip’. \u00a0The world oil price is still quite low and will remain so for some time to come (thanks to Fracking and the world slump), therefore, this will not, for the moment, conspire to increase inflation.<\/p>\n
Inflation \u00a0figures invariably lag behind reality somewhat and the trick with this is to always be \u2018on-top of it\u2019 before it \u2018runs away\u2019.<\/p>\n
If there is a \u2018hike\u2019 in interest rates and a subsequent rise in mortgage rates this will, I fear, not assist the Residential Property Market that above \u00a31.6million is struggling to \u2018gain its composure\u2019 whilst being weighted down by the millstone of excessive Stamp Duty Tax.<\/p>\n
I am sorry to say that Mr. Carney has got it wrong before, a few years ago, particularly in relation to unemployment and the level at which this would trigger a rise in interest rates. Thank goodness no one listened to him at the time. Someone should tell him that these ‘fatuous pontifications’ do not help with his credibility.<\/p>\n
The Residential Market up to \u00a3500,000 is doing nicely thank you since the coalition government gave it a fillip when they re-modeled the Stamp Duty calculation method from the clumsy \u2018slab-like\u2019 previous version in the Autumn Statement of 2014.<\/p>\n
There are fewer international buyers since the reforms of Non-Doms and, therefore, I am weary of the purpose of these changes and the loss of revenue to the Exchequer that a slower Property Market represents.<\/p>\n
Personally, I don\u2019t see any need for an interest rate change, in the short to medium term, since economic growth is already slowing and as we are in a consumer led recovery the health of the property market is an important stimulus and we do not want to put this at risk.<\/p>\n
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We all heard that Mark Carney, Governor of the Bank of England, feels that inflation is \u2018in the system\u2019 even though the headline figures are at an all time low. His concern is derived from the tightening of the Labour … Continue reading