Member Article

Rates held again at 5%

The Bank of England this week held UK interest rates at 5% for the fourth consecutive month.

The Bank’s Monetary Policy Committee announcement was being branded beforehand as one of the most difficult decisions of recent times as growth has slowed while inflation has risen.

Last month, while the bulk of members voted to hold rates, one supported a cut, while another backed an increase.

Richard Bottomley, president of the North East Chamber of Commerce (NECC), said: “The price of oil has had a major impact on inflation in recent times and we are now starting to see this drop. This is good news for the economy at a time when economic growth is slowing and will have eased the pressure on the Bank of England to raise interest rates to counter rising inflation.

“The stability this brings is important as firms did not want to face a hike in rates at a time when they were redoubling their efforts to remain competitive.”

Liz Smith, Assistant Regional Director, CBI North East said: “The latest data show the slowdown in UK economic activity gathering pace, and business and consumer confidence falling further. However, with inflation heading higher in the next couple of months, the Bank is right to leave rates on hold for the time being.”

North East manufacturers accepted the decision, but warned that a cut in interest rates may only be matter of time amid further signs of a weakening UK economy. EEF Regional Manager, Tony Sarginson, said: “The MPC continues to be pulled in opposing directions by rising inflation and slowing growth. However, the balance of risk appears to be shifting more rapidly. A cut in interest rates may be needed sooner rather than later to prevent the economy from drifting towards recession.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .