By Johann Tasker
BANK OF ENGLAND officials are meeting today to decide which way next for interest rates, amid calls from farm leaders and industry bosses for a reduction in the cost of borrowing.
NFU director general Richard Macdonald called on the banks Monetary Policy Committee to signal that the next move on interest rates would be downwards.
“Action is desperately needed,” he said. “The high Pound has increased food imports and made our exports less competitive on European markets.”
Similar pleas have been made by manufacturers. The Confederation of British Industry last week said its members are being pricing out of the export market by Sterlings strength which continues to suck in imports.
A reduction in interest rates could help boost exports and reduce imports by reducing the Pounds value, thereby making investment in the UK less attractive to foreign businesses.
City analysts expect the to keep rates pegged at 7.5%. Bank officials, who announce their decision on interest rates tomorrow, have warned that a reduction is out of the question until upward pressure on inflation is reduced.
Interest rates have been increased six times since Labour came to power in May last year.
- “Weaker Pound no salvation for farmers”, FWi, yesterday (4 August)
- Interest rates remain unchanged, FWi, 9 July
- Incomes set to fall after Pound soars to 10-year high, FWi, 3 April