ITEM Club warns of 'choking' interest rates
The ITEM Club, the economic forecasting group sponsored by Ernst & Young, has warned that the Bank of England could 'choke the life' out of the economy if it continues to raise interest rates.
The ITEM Club, the economic forecasting group sponsored by Ernst & Young, has warned that the Bank of England could 'choke the life' out of the economy if it continues to raise interest rates.
Link: ICAEW: Interest rate rise threatens SMEs
The group’s latest report described the Monetary Policy Committee’s quarter-point rise earlier this month – its first in nearly four years – as premature.
Peter Spencer, economic adviser to the ITEM Club, said: ‘The risk is that in tightening the monetary policy screw too early the MPC will choke the life out of the fragile economic recovery.’
The report warned specifically against a further increase in December, when it said consumer confidence was ‘critical’ for the retail and property markets. A rise might prove the trigger to push the consumer into serious retrenchment and the economy back into stagnation, it concluded.
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