Press Release

Forimmediate release

Tuesday4 November 2003

'Proceed with Caution', IoD urgesBank

The Institute ofDirectors (IoD) said today that Bank of England concerns over rising householddebt will almost certainly result in a quarter point rise in interest rateslater this week.

If the Bank'sMonetary Policy Committee leaves interest rates unchanged, there is anincreasing concern that the debt burden could rise even further and destabilisethe economy. Having waited patiently for households to restrain borrowing, allthe signals now point to the MPC intervening in order to change future interestrate expectations. However, the MPC is still expected to proceed with caution,in order to avoid house prices falling.

Graeme Leach, ChiefEconomist at the Institute of Directors, said:

A quarter point upwardmovement in interest rates looks almost certain. UK household and Governmentspending and borrowing continues to grow strongly at the same time as GDP growthsurges in the US. However, the MPC will need to proceed carefully and we do notexpect a half point interest rate rise the so called nuclear option.

ends 4.11.03 No.202

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Noteto editors

TheInstitute of Directors is a non-party political independent organisation witharound 55,000 members. In addition to its wide range of business services, theIoD provides an effective voice to represent the interests of its members togovernment and key opinion-formers. It also brings the experience of businessleaders to bear on the conduct of public affairs