‘Ideal time’ for interest rate cut as inflation slows - claim

Inflation has hit a new two-year low as the cost of living measure slowed to 3.4% in February.

The figure is down from 4% in January, helped by a 5% drop in food inflation, although the Office for National Statistics warned that housing costs remain high.

It has prompted hopes that the Bank of Engladn will be encouraged to cut interest rates and that there could be a boost for the housing market as buyer purchasing power improves.

Tom Bill, head of UK residential research at Knight Frank, said: “The UK housing market recovery has been slow and inconsistent as inflation and jobs data send mixed signals. 

“Stubborn core inflation is the Bank of England’s biggest headache, which means rate cut expectations have moved further into the distance, mortgage costs have crept up and downwards pressure on prices has increased. A rate cut this month or in May would boost buyer sentiment but summer appears a more realistic prospect than spring based on current evidence.”

Nathan Emerson, chief executive of Propertymark, added: “This is an ideal time for the Bank of England to start considering a cut in interest rates when they meet this month. 

Andrew Bailey, the Governor of the Bank of England, said recently that inflation does not have to fall to 2 per cent before the central bank starts considering cutting interest rates. 

“Propertymark’s own Housing Insight Report shows that there has been an average 120% increase in the number of potential buyers registered per member branch and this is potentially an ideal time to revitalise the housing market.”