All the day’s economic and financial news, as BoE deputy governor Sir Jon Cunliffe joins the widening split over interest rates
- Nationwide: House price have recovered..
- …But London growth at five-year low
- Cunliffe: No rush to raise rates
- The agenda: House prices, central bank chatter
Sir Jon Cunliffe has “drawn the battle lines” for August’s monetary policy committee meeting by arguing against an early interest rate rise, says Bloomberg’s Lucy Meakin.
Here’s a flavour of her piece:
While some members of the BOE’s rate-setting committee have argued that consumer-price inflation of 2.9 percent means an increase in bank rate is required imminently, Cunliffe said that has been driven by the pound’s depreciation since the Brexit referendum and that wage pressures have remained low.
Inflation above the 2 percent target is “not a comfortable place,” Cunliffe said in an interview on BBC radio. However, “we do have to look at what’s happening with domestic inflation pressures and on the data we have at the moment, that gives us a bit of time to see how this evolves.”
London house price are now rising at the slowest rate since 2012, says Nationwide.
This chart shows how house prices in the UK capital have come off the boil, having outpaced the rest of the country for several years.
London house prices barely rising, weakest annual growth since 2012 – Nationwide pic.twitter.com/yUQ4TMpTWD
“First came Britain’s electoral map, then its property map. June has seen them both redrawn.
“For London’s house prices to be growing at the second slowest rate in the country would have been unthinkable for much of the past decade.
Jeremy Leaf, north London estate agent, agrees that the rebound in UK house prices in June is “a little surprising”.
He says that current low interest rates helped to push prices up by 1.1% last month, as did is a lack of supply:
‘However, looking forward the shortage of supply and lack of housebuilding are certainly two of the factors supporting the market.
These will need to improve if we are going to see more sustainable growth in housing transactions.
Nationwide shows stronger house price growth in June after weak spring
My current estimate for the change in house prices over 2017 is 1.9% pic.twitter.com/fyywsfrrqK
Odd-looking jump in UK house prices, with stock levels low; but other signals suggesting moderation (Nationwide) pic.twitter.com/gcyM26FQUp
A gentle slide in prices could continue but it’s got less to do with Brexit and more to do with four factors that can be the Four Horsemen of the Apocalypse for markets – inflation, consumer credit, wage growth and mortgage activity – all of which have been dragging their heels recently.
“In May, mortgage approvals hit an eight-month low, wage growth slumped, inflation rose unexpectedly to 2.9%, a near four-year high, and consumer credit also fell dramatically.
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Now here’s a surprise…. UK house prices have rebounded quite strongly this month, despite a slowdown in London.
Prices rose by 1.1% in June, according to the latest figures from Nationwide, reversing three months of falls. That means the average house costs 3.1% more than a year ago, at £211,301.
“The annual rate of house price growth, which gives a better sense of the underlying trend, continues to point to modest price gains. Annual house price growth edged up to 3.1% from 2.1% in May.
In effect, after two sluggish months, annual price growth has returned to the 3-6% range that had been prevailing since early 2015.
Jon Cunliffe also admitted that the recent surge in inflation, to 2.9%, means the Bank of England isn’t in a “comfortable place” right now.
Bank of England Cunliffe says the MPC is not “in a comfortable place” as civil war rages on the MPC with a clear split in opinions forming. pic.twitter.com/O5IB7UO1WL
The split at the Bank of England over when to raise interest rates has widened further this morning, after deputy governor Sir Jon Cunliffe waded in.
“[Consumer spending] is slowing as households’ real incomes are squeezed by higher inflation, we expect some of that slowing to be offset by growth in business investment, growth in exports. And I want to see how that plays out.
(We) do have to look at what’s happening to domestic inflation pressure, and I think that on the data we have at the moment, gives us a bit of time to see how this evolves.”
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Central bankers are commanding our attention again today. Last night, Federal Reserve chair Janet Yellen gave a rare hostage to fortune by predicting that we’ll probably live out our days without seeing a repeat of the 2008 crisis.
“Would I say there will never, ever be another financial crisis?
“You know probably that would be going too far but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be.”