June 9, 2011

UK interest rates kept at 0.5%

As expected, the Bank of England’s monetary policy committee left its benchmark rate at a record low of 0.5% for the 27th month in a row. It also left its £200bn quantitative easing programme unchanged.

It was the first meeting for new MPC member Ben Broadbent, a former Goldman Sachs economist, who replaced arch-hawk Andrew Sentance.

City economists have put back the likely date for the first increase to this autumn, but many think it won’t happen until next year. A November rate rise is seen as a 60% probability, while markets are not fully pricing in a rate rise until next April.

Source: Guardian

Central London rents to rise by 10%

The London Evening Standard is reporting further rent rises this year…

Tenants in central London should brace themselves for rent rises of up to 10% this year, property consultant Cluttons said today.

It is not as steep as last year’s record 19.1% jump in rental costs but it is still more than double the rate of inflation, heaping more pressure on stretched budgets.

The worst squeeze on rents is being felt in lower-budget properties of between £250 and £650 a week, which remain in short supply as tenants bid to cut their outgoings and look further afield.

Residential lettings partner Lynn Hilton said: “Tenants are really feeling the pinch and are being forced to widen their search areas to secondary locations and beyond.”

The pressure on existing tenants looking to renew contracts is less because they face smaller rises of around 4%, as landlords concerned about the economic outlook opt to retain quality tenants rather than take the risk of leaving their properties empty.

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Source: Evening Standard