Bank of England Governor Andrew Bailey (pictured) has warned that interest rate cuts are “off the table” in a blow to the property market.

Many in the industry were hoping for a base rate cut or two in the next few months to give sales some impetus in the face of political uncertainty.

Unknowns

The effects of war in the Middle East are still hampering progress in the market, and now an imminent change of Prime Minister is adding extra unknowns to the situation.

Speculation that Andy Burnham, who looks set to takeover in Downing Street, may overhaul property taxes has introduced more nervousness.

That was off the table in March, and it’s off the table at the moment.”

Bailey said: “There was an expectation that we would cut rates this year. That was off the table in March, and it’s off the table at the moment.”

In some good news for the market though, he confirmed that he had not voted for an increase this year.

Cut unlikely

The Bank’s rate-setters voted 7-2 to hold interest rates at 3.75% for the fourth consecutive time last month.

This was widely expected as inflation remains stubbornly above the Bank’s 2% target.

At 2.8%, the inflation rate is at least lower than in previous months, easing any pressure on the Bank’s Monetary Policy Committee (MPC) to consider a rate rise.

The MPC next meets at the end of this month and then again in September, with any hope of a rate cut on those occasions now looking very unlikely.