Real Estate Capital Forum: BoE should hold interest rate

The Bank of England should not raise interest rates just yet and should maintain its quantitative easing (QE) programme to encourage bank lending, an audience at Real Estate Capital’s Europe Forum 2015 heard this morning. In his keynote address to more than 130 real estate finance professionals, Dr Gerard Lyons, chief economic advisor to London City Hall, said the risks to the UK economy of raising interest rates outweighed maintaining the status quo.

The Bank of England should not raise interest rates just yet and should maintain its quantitative easing (QE) programme to encourage bank lending, an audience at Real Estate Capital’s Europe Forum 2015 heard this morning.

In his keynote address to more than 130 real estate finance professionals, Dr Gerard Lyons, chief economic advisor to London City Hall, said the risks to the UK economy of raising interest rates outweighed maintaining the status quo.

REC Forum image 1The Bank of England has kept its official bank rate at 0.5% since March 2009 and has provided about £375bn of QE to date.

“I certainly don’t think the Bank of England should be hiking rates just yet. If I was there I’d be voting to keep rates unchanged and to keep QE to make sure bank lending and growth picks up,” said Dr Lyons.

“If you hike early, you don’t have any room to manoeuvre if the economy takes a dive. Normally the risk of waiting is inflation becomes a problem but inflation is not a worry at the moment. That suggests to me that, if anything, the Bank of England should wait,” he added.

Dr Lyons’s keynote is one of more than a dozen panel sessions, roundtable events and presentations taking place over the next day-and-a-half at the Forum, being held at the Institute of Directors near Trafalgar Square in London.

Gerard Lyons
Gerard Lyons

Among the 50 speakers are Madeleine McDougall of Lloyds commercial real estate, Russell Gould of Citi commercial real estate finance, Robin Carr of investment manager Aerium, Rob West of Clearbell Capital, Barry Fowler of Aviva Investors, Bhavesh Patel of Deutsche Bank and Scott Malkin of Value Retail.

The topics covered include: Investing in Debt, can promised returns be achieved?; UK Real Estate, looking for value; Borrower perspective, sourcing finance; Debt underwriting; and Preferred Equity v Mezzanine, which one to favour and when?

Jane Roberts, Real Estate Capital editor, said the real estate finance market “seems finally to be firing on all cylinders again and is back to being able to support property investment across all sorts of types and sectors again.”

“Lenders have sorted out their strategies and are on the front foot again. Investors have taken to private real estate debt after all and the number of managers currently out there raising for follow-on funds proves their funds weren’t one-fund wonders and there really is interest in investing in the asset class,” she added.

The Real Estate Capital Europe Forum 2015 concludes on Wednesday afternoon.

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