Mr George said a pre-emptive cut would suggest that the authorities were once again willing to take risks with inflation, maybe triggering a self-fulfilling rise in inflationary expectations. The unexpectedly big jump in average earnings growth in March illustrated the danger, he said.
The Bank and the Treasury insist that Mr George and Mr Clarke, the Chancellor, are 'as one' in their commitment to sustained, non-inflationary recovery. But marked differences in nuance, with Mr George always more cautious on rates, have persisted in public utterances and the minutes of their monthly meetings to discuss base rates.
Mr George's comments to the Northern Ireland Chamber of Commerce came as four of the 'six wise men' who advise the Chancellor on the economy urged that interest rates stay unchanged.
'A further cut now, unjustified by economic news, runs the risk of sacrificing credibility in the financial markets,' they concluded. But the other two wise men said rates should be cut at once.
They predicted on average that the economy would grow by 2.9 per cent this year before slowing slightly in 1995. Most thought inflation would stay within the Government's target range.
Demands for another rate cut were dimmed by figures from the Central Statistical Office which unexpectedly showed a 0.4 per cent rise in high-street spending in April, suggesting little damage yet from the tax increases.
But the CSO made a large one- off adjustment to the figures to compensate for the shift in spending from April to March that resulted from an unusually early Easter. This cast doubt on the accuracy of the monthly data, but the less volatile three-monthly comparison showed 1 per cent rises between the three months to January and the quarter to April.
'Retailers were fearful that the April tax increases would demonstrably hinder demand, but a careful review of the figures shows this not to have been the case', said Hugh Clark of British Retail Consortium, the shops and stores trade association.
Ian Shepherdson, of HSBC Greenwell, said retail sales were probably growing at a trend rate of 3.25 to 3.5 per cent a year, but that the official figures were in contrast to Confederation of British Industry surveys showing sales slowing.
April's rise in retail sales was broadly spread, with department stores seeing sales increase by 1.2 per cent, clothes sales rising by 0.9 per cent and food sales by 0.4 per cent. The only fall was in the household goods sector, despite severe price cutting.
Adrian Cooper, of James Capel, said consumer spending was growing more quickly than he expected and national output could well rise by 3.2 per cent during the year.
The most pessimistic view on interest rates was taken by UBS's Robert Lind. 'In 1995, with rising inflation, surging growth, a burgeoning current account deficit and a fragile currency, rates should escalate towards double digits,' he predicted.
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