Interest Rate Uncertainty Continues, say bosses

8 June 2006

Commenting on today's decision to leave interest rates unchanged, Graeme Leach, Chief Economist at the Institute of Directors (IoD) said:

"The uncertainty continues. The recent appreciation in sterling and the latest industrial output figures have probably prevented a base rate rise for the time being. The Bank of England seems content to let monetary policy tighten via the exchange rate instead of interest rates.

"The minutes of today's meeting will be eagerly awaited to find out how sentiment has shifted from last month's three-way split on interest rates. Strong survey evidence and money supply growth suggest rates will rise over the coming months, but uncertainty remains as to how consumer spending and manufacturing output will perform. If interest rates do rise, the most likely month for a move is August, to coincide with the publication of the next Inflation Report."