Warnings have been given that the Bank of England may need to put interest rates up again within the next few months, following the recent quarter per cent rise to 4.
5%, with governor Mervyn King indicating there was a ’50-50 chance’ that inflation would rise above three per cent over the next six months.
But Ashburton director and global investment strategist Peter Lucas said he expected the Bank to put interest rates on hold for the time being, after the recent ‘unexpected’ hike.
‘This is clearly a hammer blow to the UK property market which had looked like it was picking up again,’ he said.
‘The UK now has to contend with a double whammy of higher interest rates and a US slowdown.
Therefore it’s going to be a tougher economic environment and the property revival will fade.
‘This is as good as it gets.
The more rate hikes now, the greater the future economic slowdown.