Interest rate cut looks very possible
There are promising signs for rate watchers hoping for an earlier interest rate cut, with new data pointing to a cooling economy.
UK inflation has fallen to its lowest level in two and a half years, as price pressures continue to ease.
The consumer prices index has dropped to 3.2% in March, the lowest since September 2021, down from 3.4% in February.
However, that is slightly higher than City economists expected – they had pencilled in a drop to 3.1%.
It brings inflation further towards the UK’s 2% target, and away from the 40-year peak over 11% in autumn 2022.
It means real wages are still increasing, as regular pay grew by 6% per year in the three months to February.
Economists expect a further decline in inflation in April, with potential to fall below the Bank’s 2% target after a sharp drop in household gas and electricity bills to the lowest level for two years.
Nathan Emerson, CEO of Propertymark, commented: “It is encouraging to see that inflation is starting to decline towards the same levels it was at prior to the Covid-19 pandemic. People will be relieved to start experiencing some normality again without fearing that prices will rise at almost unaffordable levels.
“When the Bank of England meets in May, we may see them begin to have the confidence to gradually cut interest rates in order to stimulate activity on the housing market during spring, traditionally one of the busiest times of the year for the housing market.”
Reductions in the interest rate will take some pressure off landlords and that could be good news for tenants as rent rises may calm down. That said, many landlords have seen increases in their mortgage payments well above what they have increased rents by, so there is still some "catching up" to do.
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