Breaking Property News – 21/03/24
Daily bite-sized proptech and property news in partnership with Proptech-X.
Bank of England hold rate at 5.25%
‘The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 20 March 2024, the MPC voted by a majority of 8–1 to maintain Bank Rate at 5.25%. One member preferred to reduce Bank Rate by 0.25 percentage points, to 5%.
Since the MPC’s previous meeting, market-implied paths for advanced economy policy rates have shifted up. In the United States and the euro area, inflationary pressures have continued to abate, though by slightly less than expected. Material risks remain, notably from developments in the Middle East including disruption to shipping through the Red Sea.
Having declined through the second half of last year, UK GDP and market sector output are expected to start growing again during the first half of this year. Business surveys remain consistent with an improving outlook for activity. The fiscal measures in Spring Budget 2024 are likely to increase the level of GDP by around ¼% over coming years. As the measures will probably also boost potential supply to some extent, the implications for the output gap, and hence inflationary pressures in the economy, are likely to be smaller.
Reflecting uncertainties around the ONS’s Labour Force Survey, the Committee is continuing to consider a wide range of indicators of labour market activity. The labour market has continued to loosen but remains relatively tight by historical standards. Although still elevated, nominal wage growth has moderated across a number of measures. Contacts of the Bank’s Agents continue to expect some decline in pay settlements this year and to report greater difficulty in passing on cost increases to prices.
Twelve-month CPI inflation fell to 3.4% in February from 4.0% in January and December, a little below the expectation in the February Monetary Policy Report. Services consumer price inflation has declined but remains elevated, at 6.1% in February. Most indicators of short-term inflation expectations have continued to ease.
CPI inflation is projected to fall to slightly below the 2% target in 2024 Q2, marginally weaker than previously expected owing to the freeze in fuel duty announced in the Budget. In the February Report projection, CPI inflation was expected to increase slightly again in Q3 and Q4, accounted for by the direct energy price contribution to 12-month inflation. Services price inflation is expected to fall back gradually.
The MPC’s remit is clear that the inflation target applies at all times, reflecting the primacy of price stability in the UK monetary policy framework. The framework recognises that there will be occasions when inflation will depart from the target as a result of shocks and disturbances. Monetary policy will ensure that CPI inflation returns to the 2% target sustainably in the medium term.
At this meeting, the Committee voted to maintain Bank Rate at 5.25%. Headline CPI inflation has continued to fall back relatively sharply in part owing to base effects and external effects from energy and goods prices. The restrictive stance of monetary policy is weighing on activity in the real economy, is leading to a looser labour market and is bearing down on inflationary pressures. Nonetheless, key indicators of inflation persistence remain elevated.
Monetary policy will need to remain restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term in line with the MPC’s remit. The Committee has judged since last autumn that monetary policy needs to be restrictive for an extended period of time until the risk of inflation becoming embedded above the 2% target dissipates.
The MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably. It will therefore continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation. On that basis, the Committee will keep under review for how long Bank Rate should be maintained at its current level’. Source – Bank of England – News.
‘The Bank of England has kept interest rates on hold for the fifth meeting in a row, but signalled that the economy is “moving in the right direction” to allow for cuts to borrowing costs. Members of the nine-strong monetary policy committee (MPC), the group tasked with setting interest rates in the UK, voted 8-1 in favour of keeping the base rate at 5.25 per cent, a 16-year high.
However, two members of the MPC who had consistently voted for a rise in interest rates favoured a hold at this meeting, suggesting that the group is near to agreeing that a reduction in borrowing costs is appropriate’. Source – The Times – Jack Barnett
‘The boss of the Bank of England has said it is “not yet” the time to cut interest rates leaving them unchanged for a fifth time in a row at 5.25%. The widely expected decision means the cost of borrowing remains at its highest level for 16 years. Eight of the nine Bank rate setters voted to leave rates unchanged, with only one voting in favour of a cut. The Bank has kept interest rates at a high level in a bid to slow the pace consumer prices have been rising at.
But after inflation fell to its lowest level in two and a half years last month, economists expect rates to start falling in June. Governor Andrew Bailey said he had seen “further encouraging signs” that inflation was coming down, but added policymakers had to be sure that it would fall back to its 2% target and “stay there”. “We’re not yet at the point where we can cut interest rates, but things are moving in the right direction,” Mr Bailey said.
Five marathons in May to raise £1M for homelessness charity
On 16 May 2024, Jon Cooke, CEO of nurtur.group, Sean Newman of Fine & Country Midlands and Craig Dyce, current age group World and European Duathlon Champion, will lace up their running shoes to embark on an incredible journey along the Grand Union Canal Towpath. The route spans 154 miles, beginning at Gas Street Basin in Birmingham, winding through the picturesque countryside of Warwickshire, Northamptonshire, Buckinghamshire, and the Chilterns, before concluding their epic run at Fine & Country’s Park Lane office in London.
The trio will cover approximately 34 miles per day over the course of five days, with an expected finish date of 20/21 May 2024, depending on their progress. While Cooke and Dyce plan to run the route, Newman will be walking. They extend an open invitation to anyone who wishes to join them on a leg of the route, encouraging participation and camaraderie along the way. People are welcome to join, opting to either walk, run, or bike a section of the route. For those unable to join in person, they can still show their support by offering words of encouragement and making donations.
The primary purpose of this extraordinary undertaking is to raise funds for the Fine & Country Foundation, an organisation established in 2014 by Malcolm Lindley and Sean Newman. Dedicated to assisting those facing poverty and homelessness, the Foundation annually distributes grants to numerous charitable organisations, utilising funds from the Fine & Country network and public donations. Since its inception, the Foundation has raised over £940,000. In celebration of its 10th anniversary, Cooke and Newman aim to help reach the £1 million milestone with this fundraising effort.
Commenting on the initiative, Cooke, who is also the Trustee of the Foundation, stated, “Running and walking the length of the Grand Union Canal Towpath is not only a physical challenge but also an opportunity to make a meaningful difference in the lives of those in need. We’re honoured to support the Fine & Country Foundation’s vital work and are committed to reaching our fundraising goal.”
Newman added, “The Foundation’s mission resonates deeply with both Jon and I. As we embark on this journey, we invite individuals and communities to join us in our efforts to raise awareness and funds for those experiencing hardship.”
If you have a view – please let us all know by emailing me at editor@estateagentnetworking.co.uk – Andrew Stanton Executive Editor – moving property and proptech forward. PropTech-X
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