The Bank of England’s Monetary Policy Committee has voted to increase interest rates from 4.0% to 4.25%, the third quarter-point rise since November. The move was widely predicted by economists, following the recent release of economic data which revealed evidence of recovery in the manufacturing sector, a rise in retail sales, and an increase in the pace of mortgage lending. The British Chambers of Commerce said that it was not surprised by the move, but urged the MPC to remain cautious when considering interest rates in the coming months. David Frost, director general of the BCC, said, ‘we appreciate that the MPC may have to raise interest rates further later in the year if the recovery accelerates and inflationary pressures worsen. But there should be no further tightening until the strength of the recovery and underlying inflationary pressures are clearer’. Many analysts are now forecasting that rates will reach around 4.75% by the end of the year.
Date:6 May 2004
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