Interest Rate Cut still likely, says IoD

6 October 2005

Despite today's freeze in interest rates by the Bank of England, business leaders still predicted a cut in November. The impact of rising energy costs on inflation will almost certainly lead to quarter point reduction next month, the Institute of Directors (IoD), said:

Miles Templeman, Director General of the IoD, said:

"Although we have been calling for an interest rate cut, today's decision was not a surprise. The Bank is probably holding off for another month owing to uncertainty as to how far rising energy costs will impact on economy-wide inflation.

"With GDP growth now well below potential output growth, the rising output gap suggests inflation concerns will soon give way to one final interest rate cut for 2005."