Yet I am sure I am not alone in feeling a distinct sense of déjà vu. 'Imminent' rate rises have been repeatedly postponed over the last year, as rhetoric ran into economic hiccups. And while by some workforce measures a rate rise should be on the way if central bank bosses are to keep their promises, other economic indicators suggest elements of the recovery remain fragile. UK unemployment actually rose in spring for the first time in two years, US retail sales slipped when forecast to rise, and there’s the small matter of global growth risks from Europe and China. Unsurprisingly, many commentators suggest talk of imminent rate rises might be more face saving bluster from the likes of Mr Carney and Ms Yellen, whose forward guidance has proved increasingly risible; a rate rise, like anything else that may happen in the future, is always “moving closer” after all, so it’s difficult to conclude anything other than the likelihood that still no one knows when a rate rise is actually going to happen.
Despite the fact that markets have been well softened up for an increase, and the unconvincing nature of Mr Carney’s latest attempted guidance, the latest news did spark yet another sell off among some interest-rate sensitive sectors – not least the housebuilders. Again, that feeling of déjà vu. Housebuilders were weak the last time discussion of an imminent rate rise surfaced, but we were less convinced and stuck with our bullish view based on the sectors’ fundamentals. Little has changed now, so the mini sell off could be another opportunity to eke out a few more gains, especially as the Tory government seem intent on reforming the planning process to stimulate more construction (see page 11). We wouldn’t even be that perturbed should a rate rise actually happen – it won’t be large, is unlikely to spark a rapid succession of them, and wouldn’t (unlike the euro, allegedly) be irreversible should it indeed have a deleterious effect on our debt-fuelled economy. And with household debt in the UK and the US still soaring, such a U-turn could come far quicker than any rise has.
