Prices rising, but CBI pleads for pegged rates
The CBI's quarterly survey will weigh heavily on the minds of the Chancellor and the Governor of the Bank of England when they meet to discuss interest rates next week.
They will also discuss the Bank's latest inflation forecast, due next Tuesday, which will reflect the fact that recovery has slowed in the third quarter but is still exceeding its long-term trend. Some City economists said the meeting could agree an immediate rise in rates.
The survey showed manufacturers' costs being pushed higher by raw material prices, but companies increasingly finding themselves able to pass cost increases on to customers.
The number of firms planning to invest in new capital equipment rose to a five-year high as the number working at full capacity climbed further above its long-term average.
But the CBI maintained that the survey results 'do bode well for future inflationary pressures', arguing that a rise in the number of firms reporting price increases was normal for the time of year. Andrew Buxton, chairman of the CBI's economic affairs committee, said there was a risk of another interest rate rise but added: 'We don't think the facts are there to justify the risk.'
CBI economists said they were particularly encouraged by the strength of export orders and the fact that manufacturers were planning the biggest increase in investment for six years. Business optimism is also improving faster.
The survey prompted little reaction from the financial markets, with interest rate forecasts becoming only slightly more pessimistic in the short-sterling futures market.
The FT-SE index closed off its lows, down 28.2 at 3,000.9. The dollar dropped to a post- war low against the yen and a two-year low against the mark.
View from City Road, this page
- 1 Disney heiress Abigail disowns her share of family profits in West Bank company
- 2 The secret report that helps Israel hide facts
- 3 'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
- 4 Israel's propaganda machine is finally starting to misfire
- 5 HSBC closes bank accounts belonging to Muslim clients in the UK
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK
Sabina Altynbekova, the girl branded 'too good looking' for volleyball, says social media obsession with her is a 'bit much'
Disney heiress Abigail disowns her share of family profits in West Bank company
Drew Barrymore’s sister Jessica found dead in her car surrounded by 'dozens of white pills'
'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
The secret report that helps Israel hide facts
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
A day in the life of Vladimir Putin: The dictator in his labyrinth
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Boozy, ignorant, intolerant, but very polite – Britain as others see us
- < Previous
- Next >
iJobs Money & Business
£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...
£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...
£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...
£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...