Rates hold only delaying inevitable cut say manufacturers

The manufacturers organisation EEF said that while stark rises in oil and commodity prices had given businesses as well as the Bank cause for concern, it believed that mounting threats to business and consumer confidence meant that interest rates will almost certainly need to be cut again in June. EEF chief economist Steve Radley, said: “The economy has been through a series of shocks since the credit crisis hit last summer and the Bank has been right so far in responding with a measured approach on rates. However, despite concerns on inflation, further cuts to interest rates are needed to prevent the economy from drifting towards recession.” Meanwhile, the CBI’s chief economic adviser Ian McCafferty said the Bank faced a difficult decision, but it was no surprise that rates were kept on hold this month. “While the housing market and linked activities are very weak, activity elsewhere is slowing, but is well short of recession. Meanwhile, energy and raw material prices continue to climb, meaning inflationary pressures are intensifying as producers are forced to pass these on.”