BCC warns Bank of England against rate rise

The British Chambers of Commerce (BCC) has claimed that “economic damage” will be done in the UK if interest rates go up again.

The Bank of England’s monetary policy committee (MPC) will meet later this week to decide whether to put rates up or not.

According to the BCC’s chief economic adviser David Kern, the MPC should wait for previous rate rises to avert potential damage – and there have been five in the past twelve months – to take full effect before putting another increase on: “There are already signs that the housing market may have started to soften”, he said.

Mr Kern’s position is backed up by the latest monthly house price figures from mortgage lenders Nationwide, which show a seasonally adjusted gain in inflation of just 0.1 per cent for July, dragging down the overall inflation rate for 2007 to 9.9 per cent, well down on previous double digit showings.

A Reuters poll has also previously shown a comfortable majority of city analysts agreeing that rates are scheduled to go up to six per cent by the end of the year.

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