The warning that keeping interest rates low for too long could be damaging to our economic prospects came from a member of the body that sets rates – the Bank of England’s Monetary Policy Committee. In the last set of minutes published we know that one member of this committee voted a rise, so the shift to dearer money looks to be building a little momentum. But one of these important decision takers clearly felt she needed to share her thoughts with a wider public.
Not that shares reacted in any meaningful fashion. With fears over a slowdown in China still affecting investor sentiment and a general lack of positive news, markets have tended to drift lower, but with little real selling pressure to accelerate the trend. There is not even much in the way of company news on the horizon, though results from Bovis and Persimmon confirmed that Britain’s house builders are in rude good health. Unfortunately this relatively good news was negated by worries that rising interest rates could choke off demand for new houses.
However, the Rightmove House Price Index recorded a year-on-year rise of over 6% yesterday, though prices did actually slip during the last month. Interestingly, the quarterly FTSE 100 Share Index review of constituents, due to take place shortly, could well see a housebuilder promoted to the ranks of our most valuable companies. The Berkeley Group presently ranks 89th in market capitalisation terms which should see its inclusion in our leading benchmark index.
Otherwise, the best advice for investors at present may be to relax and enjoy what is left of the summer. Shares are languishing around 10% below the peaks attained earlier in the summer and China continues to deliver upsets, with volatile conditions remaining. Still, shares are undoubtedly cheaper than a few months ago. Who knows – perhaps this marks an opportunity for bargain hunting, though it might prove prudent to see what the autumn has in store.