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NAEA recommends caution over potential New Year cuts
The National Association of Estate Agents (NAEA) is advising against too quick a reduction of interest rates in early 2006, believing cuts may raise the spectre of increased inflation and endanger the current soft landing in the property market.
Peter Bolton King, Chief Executive of the NAEA, says; ”Although first time buyers and the retail market may hope for interest rates to be brought down at the beginning of 2006, it is now more vital than ever that the Bank of England’s Monetary Policy Committee gets its timing correct.
“A hasty rate drop runs the risk of encouraging people to spend money they do not have, which could easily draw us into a period of inflation. To counteract this, interest rates would then have to be raised, which would have a serious impact on the steady growth now predicted for the housing market.
“The MPC should not be distracted by ongoing problems for first time buyers and the retail sector. Timing a rate rise incorrectly risks sacrificing a sizeable medium to long term problem for the minor benefits of a short term gain.”
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