Rising interest rates 'show strengthening UK economy'
Interest rates in Britain are set to continue rising but a house price crash can be avoided, former Bank of England Governor Lord George said today.
“You really have to anchor on the thought that rising interest rates are a sign of a strengthening economy,” he said.
“And I do think the economy is strengthening after a bit of a slow-down – a global slow-down less marked here in the UK.
“But as the economy picks up speed, as it gets closer to capacity, we need to moderate that rate of growth in order to avoid inflationary pressures building up.
“And I think that is precisely what they have been doing and will continue to do.”
Lord George was speaking to the BBC Radio 4 Today programme two days before the next Bank of England interest rates meeting.
The peer talked down the chances of rate rises triggering a house price crash.
“The most desirable outcome – I happen to think the most likely outcome – is that the rate of increase in house prices will slow.
“It will be moderated and if that happens then there is not a particular problem. We don’t need to see a fall in the level of house prices.
“What we need to see is moderation in the rate of increase of house prices and the outcome of those alternative scenarios, of course, will be quite different.”
