Will he raise interest rates or won’t he? When will he do it? Sooner…or later?
The Governor of The Bank of England is teasing us because he is in a bit of a fix. He knows that in London and South East England the property market is getting rather out of control, with property prices bearing no relation at all to people’s incomes – apart from Wayne Rooney of course. It’s looking a bit suspiciously like 2007.
So what will he do? The thing is that the Bank is supposed to be INDEPENDENT, isn’t it? But remember that Mark Carney was appointed by George Osborne..and he who pays the piper… An interest rate rise before the next election would be very bad news indeed for the Conservatives, facing as they do an uphill struggle to gain seats next time after the slimy LibDems blocked constituency boundary changes, making it a real possibility that Idiot Labour may get back in – so much for democracy.
Personally, I would bet (not TOO much) that the Bank of England will not raise rates before next May but will continue to put restrictions on LTV offered by mortgage providers and constantly fire shots across the bows of prospective property investors. He’s already been doing that by saying that he may have to consider raising interest rates earlier rather than later, and that he is very concerned at the potentially destabilising effect of the housing market. I think this strategy will work, as the real problem with the housing market is that, like so many of Dominic Littlewood’s Cowboy Builders’ work, it is built on shaky foundations. The fact is that it’s built on a ludicrously low and ultimately unmanageable 0.5% base rate, making saving and prudent money management pointless, particularly when you factor in inflation.