Press Release
For immediate release
IoD unsurprised by today's no change in interest rates
The Institute of Directors said that it was not surprised by theMonetary Policy Committee's decision to leave interest rates at 4%.
The IoD said that the economy was very difficult to read at the momentand that the imbalances seemed to be getting worse. The manufacturing sector,in particular, seemed to be deteriorating with both survey evidence andofficial data looking weak. September's output fell. Corporate profits alsoappear to be weaker. But retail sales remained fairly buoyant and consumercredit growth has been running at record levels. In addition, the housingmarket remained remarkably firm, buoyed by low unemployment and low nominalinterest rates and October's increase in mortgage lending was a record.
Ruth Lea, Head of the Policy Unit at the IoD, said:
"This month's decision by the Monetary Policy Committee to leaverates unchanged is not surprising. A rise would have been out of the question,given the weak manufacturing sector and poor corporate profits. But weappreciate that the housing market remains very warm and that recent consumercredit data have been very strong. And we understand why the Bank has not cuttoday. We do, however, expect the housing market to come off the boil andconsumer spending to moderate, then we would call for the Bank to cutrates."
Ends
5.12.02 No.137