Bank Of England holds firm on interest rates

Interest rates are holding steady at 4 per cent, despite fears that increasing house prices and High Street sales could lead to a rise in inflation.

Ignoring calls from the manufacturing sector, the Bank held firm at 4 per cent in a move that received a mixed reception from analysts, with some describing the move as signing a “death warrant” for thousands of jobs throughout the UK.

“With unemployment rising, inflation in check and significant parts of the economy slowing, raising rates should be well off the radar,” commented Stephen Radley, chief economist of the Engineering Employers’ Federation

However, other financial experts disagreed with that assessment, saying that steadied interest rates came as no surprise, with the emphasis now on possible increases during the year ahead.

Ruth lea, head of the Institute of Directors policy unit added: “We do not, on the whole, expect further cuts in interest rates unless there is rapid deterioration on economic activity.”

Recently, the governor of the Bank of England, Sir Edward George indicated that an increase in credit card borrowing could see interest rates rising. This is due to the heightened risk of increased prices following the recent high street spending spree, which saw double the amount of sales made in December 2000. (CL)