So - here we are again. Nothing’s changed, has it? Well, OK, the election. That’s quite a change. It will no doubt be stirring thoughts of action - or even action - in some readers. Angela Rayner will make no effort to endear herself to the Private Rental Sector (PRS). The focus thus far seems to be on the Social sector, but the worrying “independent” report on the PRS contains limited good news (no “hardcore” rent controls recommended, recognised that they do not work, but “rent stabilisation” mandatory) and mostly bad news (the register of landlords, presumably similar to Rent Smart Wales, because most of the ideas in there seem to copy Wales because they are doing so well in terms of rental accommodation – except, of course, that they aren’t).
What can we say with some certainty? It is unlikely that we will welcome a Labour administration that is more favourable to the PRS than the 2015 onwards Conservative administration has been. More measures that will ultimately push up rents ever further are coming, no doubt. I am not going to speculate too much - the person on the street seems to be of the mindset that “they are all the same”, OR they seem very motivated to vote against the Tories, holding Sunak accountable for the failures of his predecessors, the pandemic, and the ensuing cost-of-living crisis.
Anyway - where does that leave interest rates and inflation for the rest of this year? There are two schools of thought around the meeting on 20 June (being acutely aware you might be reading this just after the event) - firstly, that the Bank will bow to political pressure to cut rates and “do the Tories a favour”. The second is quite the opposite - that they now CANNOT cut in June even though they were going to (they weren’t, in my view, and this is mostly being said by people who are looking for an excuse as to why their forecast was wrong, again) - because it will look like they are not independent.
We will, instead, stick to the facts. At the last meeting, 2 members voted to cut and 7 to hold. 3 of the 7 will need a lot more convincing before “crossing the floor” as it is known in the trade - the other 4 are more “up for grabs”. Inflation also came down to 2.3%, right? So it’s all over, isn’t it?
Well - we would certainly hope that the times at 5%+ are over, for this cycle. Indeed, it would need a shock at this point to see 4%+ again. However, we do have to remember that the inflation target is 2%. The expectation at the last meeting was that inflation would hit 2.1% for April (not 2.3%) and that was factored into the Bank’s forecasts. They did see inflation at 1.6% in three years time - the end of their forecast period - and that could be argued to offer a little room for a cut.
