Talk of interest rate cut 'premature'

The Royal Institution of Chartered Surveyors (Rics) has responded to house price figures from Halifax and suggested that the underlying strength in the data makes talk of an interest rate cut premature.

Halifax revealed that house price growth remained slow in August, with a monthly increase of just 0.4 per cent.

However the bank said that the market remains robust, with the annual rate of price growth increasing slightly and a healthy economy underpinning demand.

Rics senior economist Oliver Gilmartin said that the Bank of England is unlikely to react to monthly figures depicting slow price growth by contemplating a cut in rates.

"The strength of recent house price data will mean that any talk of an interest rate cut remains premature, as the Bank of England attempts to slow the pace of economic growth and consumer spending into 2008," he said.

"The resilience of the housing market in recent months stands in contrast to indicators at the start of the home buying process which do show that a cooling is underway."

Mr Gilmartin also referred to evidence from high street retailers suggesting that consumers are beginning to "feel the pinch" of the five interest rate rises implemented over the last year.

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