Rates will rise further ? bank chief
The Local · 6 Feb 2006, 18:13
Published: 06 Feb 2006 18:13 GMT+01:00
Stefan Ingves, in his first speech as governor, said on Monday that the circumstances that led to the bank’s last rate rise in January have not changed. High growth and the threat of inflation were not the only factors that made rate rises likely, Ingves said.
“Household debt and house prices are also important factors, although they are not in any way decisive for this interest rate decision.”
The housing market is now heading for a soft landing, Ingves predicted.
“A gentle readjustment is likely to be ahead of us with the speed of house price rises slowing somewhat,” he said.
“If house prices and household debt were to continue rising very rapidly, there would be a risk of a more dramatic correction further down the line, with real economic effects and effects on inflation. Against this background a further interest rate increase seems appropriate.”