BoE's Lomax says rising UK house prices do not signal economic boom
LONDON (AFX) - Bank of England deputy governor Rachel Lomax said the recent rise in house prices is not a sign that the UK is set for another boom in the economy.
'I think the fact that house price inflation has edged up, especially in London, doesn't necessarily mean we are on the edge of another great boom,' she said in an interview with the Daily Mail.
The economy is not 'roaring away' as it was in the first half of 2004, she said, adding that some of the activity indicators 'seem to have ticked down in the last month or two'.
The economy has 'just pulled out of a fairly soft patch' and is now recovering in line with the Bank of England's earlier forecasts, but the question going forward will be just how well it is recovering, she said.
'Early this year we still had a vote on the committee (Monetary Policy Committee) for a cut (in interest rates). And people were talking about the Bank's forecast being absurdly optimistic when we were saying we thought the economy was going to recover without the need for a cut in interest rates'.
'The economy has regained some strength. The question is how much strength,' she told the paper.
Lomax was also keen to reiterate that UK rate-setters are not unduly troubled by short-term rises in inflation, it is the outlook for inflation that counts.
'Today's high inflation doesn't necessarily mean tomorrow's high inflation,' she said.
Data earlier this week showed annual UK CPI inflation dropped to 2.4 pct in September from 2.
5 pct in August but still remained well above the BoE's 2.0 pct target.
Lomax also reiterated that there has as yet been no sign of higher inflation feeding through into wage growth, but the bank remains 'very alert to any sign that might happen'.
She was also not too concerned that the recent jump in the RPI rate to 3.
News RSS