Rate rise worries as Bank meets

Manufacturing News, Source : TheManufacturer.com
Published : 04 Apr 2002 9:49

Bank of England economists will meet today to decide on interest rates amid mounting expectations of a rise in rates this year.

The April meeting of the Bank's monetary policy committee (MPC) follows the release of data indicating that UK manufacturers had recorded their best performance for more than a year.

The figures, seen as showing that manufacturing was finally emerging from recession, may prompt the MPC to begin reversing the rate cuts introduced last year as global economic growth slowed.

"Manufacturing was a key factor behind the rate cuts last year and by the same token, recovery here will be instrumental to the tightening cycle," said Bank of America economist Deborah Reed.

However Roger Lyons, general secretary of Amicus, has warned that the strong pound is still a problem and added that 60,000 jobs could be lost if no action is taken. He said: "Manufacturing is now facing a deepening recession and many companies will not survive it if the MPC fails to cut the interest rate by at least 0.5 per cent this month.”

Further evidence of a strong UK economy emerged on Tuesday in figures from the Bank itself, showing that consumer credit had grown to £142.8bn as Britons continued to take advantage of cheap borrowing costs.

The MPC will announce its decision at 11.00 am.

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