Interest Rates Wordwide
If one accepts that the UK has been the vanguard in this upswing, it is noteworthy that the BoE is again tightening monetary policy. The collapse of the UK housing market never materialised, despite some heady prices. Instead, home prices underwent a soft landing in 2005-6 that has been overtaken by renewed house price appreciation in the past six months. The past week’s surprise rate hike to 5.25% is a reminder that the housing boom in the West is not a bubble, but rather a symptom of low borrowing costs and a strong labour market. The BoE hike is also a reminder that the slowdown in US housing is no guarantee that the US Federal Reserve is finished raising rates in this cycle.
