Inflation worries jeopardise rate cuts

23-Jan-2008

Concerns about inflation could put further cuts in interest rates in jeopardy, it emerged last night.

Mervyn King, the governor of the Bank of England, issued a stark warning about inflation noting that it could exceed the Treasury's target range of between one and three per cent.

The latest figures from the CPI put inflation at 2.1 per cent but food and energy prices are rising.

This is of course bad news for anyone looking to buy their first property this year, as inflation worries are likely to delay further base rate cuts.

Many first-time buyers are relying on lower interest rates to make mortgages more affordable.

But if inflation remains an issue, the Bank of England could decide to leave the base rate unchanged again next month.

With many lenders reluctant to pass on the December cut to mortgage customers, first-time buyers may need to consider co-buy schemes or rely on parental support to get on the property ladder.

MPC opts for hold Inflation remains unchanged


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