Thursday September 4, 12:19 PM
INSTANT VIEW-BoE leaves interest rates at 5 pct, as forecast
LONDON , Sept 4 (Reuters) - The Bank (TBHS - news) of England kept interest rates at 5 percent for a fifth consecutive month on Thursday, as forecast by all analysts in a Reuters poll.
Following are reactions from business groups and economists to the decision.
IAN MCCAFFERTY, CBI CHIEF ECONOMIC ADVISOR
'The bank has decided not to cut rates despite the growing weakness of the economy. It clearly remains concerned about inflation, which is likely to rise to just over five per cent in coming months. But as the autumn unfolds, the chances of a rate cut will increase, as the slowdown improves the inflation outlook for next year.'
GRAEME LEACH, INSTITUTE OF DIRECTORS
'On balance we think this was the right decision. The housing, construction and financial services sectors are clearly desperate for an easing in monetary policy, but outside of these sectors the case for an interest rate reduction now is weaker.
'The MPC (A050540.KQ - news) wants to see further evidence of the economic slowdown cascading across the whole economy, before reducing interest rates. The MPC is very conscious that a premature reduction in interest rates now risks even higher inflation and interest rates in the future. The MPC will also be waiting to see if the Blue Book revisions at the end of this month confirm the picture of a sharply slowing economy.'
EEF CHIEF ECONOMIST STEVE RADLEY
'So long as inflation remains stubbornly high, the Bank will continue to face a tough choice. But mounting evidence of a stagnating economy means the case for further cuts is growing.'
Keywords: BRITAIN BANK/RATES
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