Truly as safe as houses? (TT Mar03 p6-7)

The recent twenty-five basis point cut in UK base rates caught the city by surprise. In a display of pessimism remarkable even by economists’ standards it was interpreted as ‘what does the Bank of England know that we don’t?’. The Bank of England Committee’s statement mentioned lower than expected growth at home and abroad.Yet the controversy around the decision arises out of the interaction between interest rates, inflation and the housing market.