Latest News from Almond Valley Property Centre
No new Bank of England policymakers vote for rate rise
Bank of England policymakers voted 6 to 3 in favour of keeping rates on hold this month, minutes of March's Monetary Policy Committee (MPC) meeting show.
Hawks Spencer Dale, Martin Weale and Andrew Sentance were unable to win other members over to their side.
UK interest rates have now been held at their record low of 0.5% for two years.
There have been some calls for a rise with the the Consumer Prices Index rising at an annual rate of 4.4% in February.
'Significant risk'
Worries are growing about the recent pick-up in inflation, boosted by rising commodity prices and the VAT increase.
Releasing the minutes of its meeting, the Bank said there was a "significant risk" inflation could exceed 5% in the coming months.
But, keeping rates on hold, the Bank said there had been no major change in the medium-term outlook.
However, it pointed out that the recent rise in oil prices, fanned by tension in the Middle East and North Africa, had increased adverse risks to both inflation and growth.
That, it said, could have a knock-on effect which could affect businesses and investor confidence.
'Not appropriate'
Bank chief economist Mr Dale and external MPC member Martin Weale both again voted for a rise to 0.75%.
And Andrew Sentance maintained his call for an increase to 1%.
"Other members concluded that an increase in Bank Rate was not yet appropriate," the Bank said.
Meanwhile, Adam Posen was again a lone voice calling for an additional £50bn of quantitative easing.
Property market 'still subdued', lenders say
New figures have confirmed that the property market is still very subdued.
The British Bankers' Association (BBA) said the number of new mortgages its members had approved for homebuyers had risen by 3% in February, to 29,923.
However that was still 11% fewer than a year ago.
Meanwhile HM Revenue and Customs (HMRC) said 57,000 homes had been sold in the UK in February, 4,000 higher than in January, but slightly fewer than in the same month a year ago.
"Mortgage lending remains subdued, with only remortgaging on an upward trend, as borrowers lock into lower rate products currently available," said the BBA's statistics director, David Dooks.
"Household demand for unsecured credit is also weak, as people continue to cut back on borrowing and build up deposits," he added.
UK Interest Rates held
UK interest rates have been held again at their record low of 0.5% by the Bank of England's Monetary Policy Committee.
There has now been no change to the Bank rate for two years, despite the fact that inflation is currently twice the Bank's target rate.
But there had been some speculation that rates could change this month after three MPC members voted for a rise in February.
No new quantitative easing measures were unveiled either.
The Bank has faced a dilemma over what to do on interest rates.
Raising rates slows down inflation - and it is the Bank's job to keep inflation in check.
But it also increases the cost of borrowing and there are concerns this may tip the UK back into recession, especially after the shock 0.6% contraction in the economy seen in the last quarter of 2010.
"MPC members continue to have widely divergent expectations about the outlook for inflation, so this decision comes as no surprise," Ian McCafferty, CBI chief economic adviser, said.
"The short-term data continue to cloud the issue, but there are growing risks of inflation becoming more ingrained as firms attempt to bolster their profit margins and employees seek higher wage rises in the face of sharply increased costs of energy and commodities."
The British Chambers of Commerce (BCC) said that ongoing speculation over interest rates could harm business.
"While the MPC cannot forecast its future actions, the way it currently communicates can create uncertainty. The MPC must address this in order to give businesses and market analysts a greater degree of predictability," said David Kern, chief economist at the BCC.
Three Bank of England policymakers vote for rate rise
Another Bank of England policymaker has voted for an interest rate rise - suggesting rates could be raised sooner rather than later.
Spencer Dale has joined Andrew Sentance and Martin Weale in backing a rise, minutes of February's Monetary Policy Committee (MPC) meeting show.
The remaining six MPC members voted to keep rates at historic 0.5% lows.
Worries are growing about the recent pick-up in inflation, boosted by rising commodity prices and the VAT increase.
The Consumer Prices Index rose at an annual rate of 4% in January, twice the Bank of England's official target.
Sterling climbed against the dollar after the MPC minutes were released, with the pound hitting $1.627, its highest level of 2011, as the prospect of a rate rise became more likely.
'Unwelcome'
The extra support for a rate rise highlights the increasing disagreement among the MPC.
Mr Dale and Mr Weale voted to raise rates to 0.75% while Mr Sentance called for rates to increase to 1%.
And the minutes also suggested that even those who had opposed a hike in rates this month would consider a change in stance if the UK's revised GDP figures, due on Friday, suggested the economy had picked up.
The initial data suggested GDP fell by 0.5% between October and December - though much of this was attributed to the impact of the snow and frozen weather at the end of the year.
Meanwhile MPC member, Adam Posen again voted to increase the programme of injecting money into the economy, known as quantitative easing, from £200bn to £250bn.
The British Chambers of Commerce said the apparent shift towards raising rates was "unwelcome" and that such a step, at a time when the government was slashing spending, "would increase the threat of derailing the recovery".
The increase in the VAT rate and higher fuel, energy and other commodity prices, which are largely due to international factors, would not be affected in the short term by rate rises, the BCC's chief economist David Kern added.
"Since there is no evidence that inflationary expectations are increasing and wage pressures are still modest, we believe that there is no need for the MPC to react immediately.
"While we accept that interest rates will have to increase later in the year, we believe the MPC should wait until the economy has absorbed the initial impact of the Government's deficit cutting plan."
'Delicate balance'
The Bank's deputy governor Paul Tucker made a rare public statement on monetary policy on Tuesday, saying the MPC faced a "real dilemma" over whether to raise interest rates in the next few months.
"Our job is to bring inflation back to the 2% target. That's going to take us a little while and it means that we face a real dilemma in what to do about interest rates over the next few months," Mr Tucker told BBC Radio Bristol.
"The question we face isn't to make a violent increase in interest rates, it's whether or not to take away just a little bit of the stimulus that we've been applying to the economy over the last few years. This is a delicate balance."
On Monday, Mr Weale said that while inflation had been boosted in recent months by temporary factors, he was concerned that this could feed into people's expectations about future inflation, making price rises self-perpetuating.
"If businesses and people bargaining for wages expect high rates of inflation then there's a risk that they may build those expectations into their current behaviour," he told BBC Radio 4's World at One programme.
However, Mr Posen has downplayed the risks from inflation. This week he told Oxford economists: "We must make policy based on the best available forecast... and not be tyrannised by popular fears or spectres of (inflation) expectations."
UK property market still subdued, BBA figures show
There is no upturn in sight for the UK property market Continue reading the main story
Your HomeUsing the internet when buying a house
How to be a first-time home buyer
Will house prices fall in 2011?
Dark art of obtaining a mortgage
The stagnation in the UK property market is continuing, figures from the British Bankers' Association suggest.
The BBA said mortgages approved by its members in January for home buyers were 29% lower than a year ago.
They approved just 28,932 loans for house purchase, although this was slightly higher than in December.
Meanwhile property sales in the UK fell in January to their lowest level for a year, figures from HM Revenue and Customs (HMRC) show.
Just 54,000 homes were sold across the UK last month, the smallest number since January 2010.
Sales always fall sharply from December to January, traditionally the quietest time of the year for the property market.
However, the figures chime with the continued low level of mortgage lending.
"We are seeing little change in the borrowing environment for households or businesses at the start of 2011," said the BBA's statistics director, David Dooks.
"In both unsecured borrowing and company finance, the emphasis is on repayment rather than new borrowing."
Market 'paralysis'
Mortgage approvals - new mortgages approved but not yet lent - are traditionally an accurate indicator of coming activity.
They currently suggest that the low level of actual lending and completed sales may continue for several months.
The Bank of England reported a sudden dip in December in the number of approvals.
And last week the Council of Mortgage Lenders (CML) reported that total lending to home buyers in January dropped by 13% from December, to its lowest level for a year.
The CML warned that lending would continue to stagnate because of the subdued state of the economy and the lack of funds available to them to lend.
On Monday, internet estate agency business Rightmove predicted that much of the UK property market faced "paralysis" this year.
This was partly due to the continued reluctance of would-be sellers to drop their prices to realistic levels.