The CML expects house price inflation to end the year at around 14%, and base rates to end the year at around 5.25%. Next year, the CML expects house price inflation to end the year at 8%, and base rates to end the year at 5.5%.
There are clearly risks to interest rates if the MPC decides that a more aggressive stance to rates than we anticipate is needed to combat inflationary pressure. But this is a risk it is not the CML's expectation, in contrast to the impression given in some of today's media reports. Our central view remains that there will be a more moderate slowdown over 2004/05.
