Interest Rate Freeze Expected, say Bosses

8 December 2005

Business leaders said today they were not surprised the Bank of England decided to keep interest rates on hold at 4.5 per cent for December. The Institute of Directors (IoD) said it still anticipated a cut in the New Year though.

Graeme Leach, Chief Economist at the IoD said:

"The Bank of England was never going to play the part of Santa and provide us with a pre-Christmas rate cut. But it hasn't played the part of Scrooge either, by increasing interest rates.

"From a growth perspective the UK economy needs the tonic of lower interest rates but from an inflation perspective the MPC remains alert to the risk of second round inflationary effects from higher energy prices. We still think Santa can win out over Scrooge and the next move in interest rates will be down."