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‘This could be last hike for a while’

Industry commentators like estate agency Jack-Stops reckons this latest hike in the Bank of England base rate could be the last for some time – something that would be a relief to many.

This is because the inflation rate is starting to come down, as it stood at 7.9% in June, below economists’ expectations of 8.2%.

Yesterday’s rate hike was the Bank’s 14th in a row.

Nick Leeming, chairman of Jackson-Stops, said: “Today offers a very different picture to December 2021, when the base rate sat at 0.1%. But green shoots are growing by the day. Inflation is now falling, which suggests that the tide may be turning, and if this remains the case for July and August, this could be the last rate hike for some time allowing investment markets time to settle again.

“For the property market, while incremental changes to the base rate won’t derail buyers and sellers plans entirely, the increased pressure that has been put on the cost of borrowing means realistic property pricing is essential to achieve a sale, especially at the mid-level of the market.”

The agency has seen a 13% increase in completions in July compared to June, suggesting there is still some life in the housing market.

Jatin Ondhia, chief executive of investment firm Shojin, similarly said: “There is a sense that we might be nearing the top of the interest rates mountain. Inflation is finally falling, with the next set of data on 16 August expected to show another notable decline.

“In turn, pressure will ease on the BoE, meaning it can slow or pause on its hiking of the base rate. All of this would allow for much-needed stability and hopefully a bit of confidence to return.”

Paresh Raja, chief executive of specialist lender Market Financial Solutions, added: “Even though the base rate rose, there is some good news in that the jump was smaller than previously predicted, allowing lenders to reassess their rates accordingly.”

In the MPC’s commentary it noted that inflation is expected to fall to around 5% by the end of the year, while the 2% target is unlikely to be reached until the second quarter of 2025.

However, the body said it could go further with rate hikes if evidence of more persistent inflationary pressures emerge.

Steve Clayton, head of equity funds, Hargreaves Lansdown, said: “Inflation data has been improving, but the economy remains stronger than many expected. In the end, the Bank opted to play it safe.

“A quarter-point rise keeps the pressure on – but does not add too much to the heat.”