Bank has a ‘difficult’ decision to make in slow economy

December 21, 2007 by admin  
Filed under News, News-Banking

With inflation rates expected to “creep up over the course of next year” the Bank of England has to make a “difficult decision about interest rates”, according to industry experts.

The Confederation of British Industry (CBI) has said that the combination of inflationary pressure at a time when the economy is slowing will force the Bank to make a decision on what action to take.

Lai Wha Co, principal economist for the CBI, said: “On the one hand it’s monitoring how sharply the economy might slow, but on the other hand it has to weigh up the concerns about inflationary risk.”

She added that if inflation was to rise more markedly than the market forecast then the Bank’s members may be constrained.

The cuts in interest rates that some consumers were hoping for may not be delivered Ms Co concluded.

The CBI has predicted that inflation will rise during 2008 due to the higher price of oil, gas and food.

Tags: decision, Monetary Policy Committee, forecast, interest rate, hand, economist

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