Business Groups Divided over Interest Rate Cut

Business Groups Divided over Interest Rate Cut

Small–business groups are divided about whether the Bank of England should cut interest rates – while some argue that a cut is needed to boost growth, others claim it is not possible because of rising inflation. The dispute follows the publication of a new survey by the Confederation of British Industry (CBI), which predicts that the rate of inflation is likely to exceed three per cent for the rest of 2008, peaking at 3.8 per cent in the third quarter. The CBI also forecasted that the UK economy would grow at the slowest rate for 17 years in 2009. “The high level of inflation in the short-term prevents the Bank of England from reducing rates for much of this year,” said CBI director general Richard Lambert. “But once the peak in inflation has passed, we believ... »