Hamptons comment on rate rise

Jonathan Cornell, technical director at Hamptons International Mortgages, says: This was a widely expected decision and no one should be surprised. This latest base rate increase, combined with the August rise should start to put the brakes on house price inflation.

The MPC has been very successful over the past couple of years at keeping inflation within the specified target by making small tweaks to interest rates. Monetary policy has been described as tugging a brick with a piece of elastic, you pull once and it does not move, you pull again and it still doesnt move so you give it a yank and it hits you on the nose. This increase represents the second pull.

Inflationary pressures have prompted the MPC to act now with a preventative flu jab against high inflation in the spring. However, if this latest increase fails to cool inflationary pressure the MPC may be forced into more drastic action in a few months time.