The Bank of England has received heavy doses of positive news regarding its current fiscal policy from the International Monetary Fund, but has also cautioned if measures other than raising the base rate do not keep the housing market in check that will have to be looked into.  The IMF indicated current measures to cool off the housing market are working well but should be watched closely for trends to develop which could lead to more intense management of the market.

The growth of the UK economy is not in question by anyone including the IMF.  In fact, the economy is currently on track to become the fastest growing economy in the world.  The IMF mentioned the UK’s prospects are promising.

The IMF commented on the current trends taking center stage for the UK, saying: "Headwinds that previously held back the economy – including adverse credit conditions and diminished confidence – have eased. There are signs that demand is becoming more balanced, with growth in business investment now ahead of private consumption. Employment growth has remained strong. Despite this, inflation has been contained.”

The IMF also added: "A steady increase in high loan-to-income mortgages implies that households are gradually becoming more vulnerable to falls in income and interest rate shocks.”

The Bank has maintained the current base rate level of 0.5% for more than 5 years which some economists argue should stay through more recovery time.  Others however believe the economy has now grown strong enough to withstand an increase.  With increases in house prices continuing, the Bank of England will be pressed to raise the base rate at the right time which will be walking a fine line.