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23/01/06 - Interest rates on the way down?

Ray Boulger, senior technical manager at John Charcol, believes that house prices are unlikely to move sufficiently this year to concern the Bank of England and below par growth in the economy will inhibit inflation.

There was only one base rate cut in 2005, but speculation has been rife about the impact of the Monetary Policy Committee's decisions on the stability of the housing market. The BoE has made it clear that it intends to adjust interest rates in order to influence inflation.

Boulger said: "The biggest uncertainty on the inflation front is the price of volatile commodities, particularly oil. The indications are that inflation will fall from its current level to below the Bank's target level of 2% by the third quarter of 2006. We anticipate at least two or three base rate cuts in 2006, with the first 0.25% coming in the first quater. (Mortgage Strategy)

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