What has the Bank of England got to do with house prices?
Well, the Bank of England is responsible for setting the base rate at which it lends money to other banks. The Bank of England has a tough job. It’s main responsibility as far as interest rates are concerned is to keep inflation within the governments target but in doing so it has to keep an eye on all parts of the economy and try to decide on what the interest rates should. The recent spate of rate cuts over the last few years have benefited the manufacturing sector which has been suffering from rising imports, a strong pound and falling order books. But at the same time the low interest rates have been fuelling the consumer boom. Everyone has been out spending on credit and the retailing sector has seen a boom. This, coupled with the boom in house prices has created a two tier economy. No matter what the Bank of England do, someone is going to critise them!
