Barclays Stockbrokers comments on tomorrow’s MPC decision

Despite the steadily increasing base rate, and recent strong house price inflation, Barclays Stockbrokers research as found that people are still strongly in favour of investing in property. 38 per cent of investors see commercial property as a cautious investment and over a quarter (27 per cent) believe it will produce strong returns. Although a third of investors (36 per cent) believe the performance of UK property is dependent on interest rates. Two thirds of its investors have residential exposure to the property market, while nearly one in five (19 per cent) have exposure to the buy-to-let market.

Henk Potts, Equity Analyst, Barclays Stockbrokers on tomorrow's decision: "Interest rate futures markets are currently indicating an 89% chance that Bank of England's Monetary Policy Committee will vote to raise interest rates by 0.25% to 5.75% tomorrow, the highest level since April 2001. The consensus probability attached to a 0.25% rise has more than doubled since the committee last met on June 7th. The Bank of England forecasts that consumer prices will breach the target in two years unless interest rates rise again.

"Further pressure has been added by recent robust house price inflation. We think that rates will peak at 5.75%, but the risk is to the upside. The market is currently pricing in a 70% chance of rates hitting 6%."