The Bank of England’s Quarterly Inflation Report commented that the UK economy continues to improve with unemployment falling below the threshold of 7% set last August and inflation close to the target of 2%. The Bank are not overly concerned about increasing inflation or interest rates in the near future and consider that as and when interest rates increase these are likely to be gradual. However, the Governor has warned of a bubble in residential property prices and is ready to impose constraints on lenders designed to protect them against sharp price falls should the bubble burst.
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