Interest rates expected to go up again next month
Thursday 22 May 1997
The Governor was repeating the warning he had given Kenneth Clarke, the former Chancellor, at their April meeting. Newly published minutes of the meeting showed the Bank had strongly recommended a quarter-point increase in base rates. "What we're also seeing is robust domestic demand growth at a rate which can't be sustained for very long without actually giving rise to inflationary pressures further down the track," Mr George said in a radio interview yesterday.
According to the minutes, he told Mr Clarke the need for a tighter policy in order to have a chance of meeting the inflation target two years ahead had become more urgent. The Bank recommended "making a start now".
Although the former Chancellor turned down the advice ahead of the election, Gordon Brown raised base rates to 6.25 per cent within a week of polling day.
With figures yesterday showing the housing market robust and a strong rise in consumer borrowing last month, most analysts expect the Bank to announce a quarter-point increase in June or July. Figures from the main high street banks and building societies yesterday showed the housing market recovery continued, while other consumer borrowing increased.
New mortgage lending by building societies rose slightly compared with March to pounds 1bn, about the same level as a year ago despite the transfer of National & Provincial and Alliance & Leicester to the banking sector.
Mortgage lending by banks was almost the same as in March, at pounds 740m, and up from pounds 568m a year earlier. The banks reported the second-highest total on record for consumer loans, at pounds 1.2bn in April. However, the growth in total lending by banks and building societies declined a shade to 8.9 per cent year on year. Likewise, growth in M4, the broad money measure, slowed to 10.4 per cent from 11.2 per cent in March.
Analysts reacted cautiously as transactions in the gilts repo market accounted for much of the slowdown. Monetary growth in double digits will still concern the Bank. The minutes showed that Mr George had drawn attention to strong M4 growth in the April meeting. He also said that the pace of earnings growth, since revised down, was uncomfortably high.
- 1 The black and blue dress: Makers considering a white and gold version
- 2 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 3 What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
- 5 Fearne Cotton quits Radio 1 after ten years for 'family and new adventures'
Boris Nemtsov shot dead: Outspoken Putin critic who had expressed fears for his life is shot dead
Leonard Nimoy dead: Star Trek actor dies after suffering lung disease
PornHub turns masturbation into energy in bid to save the planet
Ukraine crisis: Top Chinese diplomat backs Putin, says West should 'abandon zero-sum mentality'
What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
This is what it's like to be dead, according to a guy who died for a bit
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...