| UK
Interest Rate: 5.25%
UK
Interest Rates Forecast: Further 0.25% rise likely between
March and May
Strong
Growth Figures Lead To Inflationary Concerns
Britain's
economy is stronger than expected, according to a number
of recent reports. Both manufacturers and retailers
are feeling buoyant and reporting strong sales and rising
prices – good news for some,
but not necessarily what the Bank of England wants to
hear, as it tries to suppress inflation.
UK
GDP grew by 0.8 per cent in Q4 2006,
a little higher than expected, and bringing the annual
rate of growth to 3.0 per cent –
a strong result, and possibly enough to concern the
more hawkish members of the Bank of England's Monetary
Policy Committee.
Manufacturing
Booming
The
Chartered Institute of Purchasing & Supply's monthly
survey reveals that manufacturers are taking advantage
of strong demand and full order books to pass on their
cost increases to their customers,
with February seeing the biggest rise
in the prices charged index (Factory Gate prices) since
records began in November 1999.
Commenting
on the data, Howard Archer, Chief Economist at Global
Insight, suggested that "The manufacturing purchasing
managers survey is likely to bolster belief among the
more hawkish members of the Monetary Policy Committee
that another interest rate hike is
likely to be needed before long."
Retail
Results Strong Too
Strong
manufacturing figures were also complemented by positive
results from retailers for February. According to the
CBI, 19 per cent of retailers reported stronger sales
in February than at the same time last year, with shoes
and consumer electronics particularly strong.
Only
A Matter Of Time?
These
figures would seem to support the predictions of most
economists, who believe that at least one further
interest rate rise is inevitable. A recent
Reuters survey of 64 economists found that an overwhelming
majority believe the base rate will rise to 5.5 per
cent in the next three months – with 43 predicting
either April or May.
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