BoE warned it would be 'dangerous' to even contemplate rate rise - BCC |
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Mon, 30 Jul 2007 08:18
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LONDON (Thomson Financial) - The Bank of England has been warned 'serious economic damage' could be caused by raising interest rates beyond their current level of 5.75 pct.The British Chambers of Commerce said the Monetary Policy Committee, which meets to decide interest rates later this week, risks raising interest rates too far and is not allowing time for previous hikes to have their full effect.'There are already signs that the housing market may have started to soften,' said BCC chief economic adviser David Kern.'It is important to avoid an overreaction, which could cause serious economic damage,'.The BoE is widely expected to keep interest rates on hold this week after lifting rates a quarter point at the start of this month. However many city economists expect rates to hit 6.00 pct at some point in the coming months.However the BCC said the turmoil that hit global financial markets last week would make a rate rise have ry regrettable'.'In the UK, the recent severe floods are putting severe pressures on business, while internationally we are witnessing a sharp deterioration in the global credit markets, which has eroded confidence and has triggered widespread falls on most stock markets,' said Kern.'Against this background, it would be very dangerous to contemplate interest rate increases,' he added.rachel.armstrong@thomson.comrar/lamCOPYRIGHTCopyright AFX News Limited 2007. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
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