Bank must hold rates but premature to signal peak say manufacturers

The Bank of England must hold interest rates at their current level into the new year, until the extent of any slowdown becomes clearer and to give business breathing space in the face of escalating costs, according to EEF, the manufacturers' organisation.

Issuing its call ahead of this week’s meeting of the Monetary Policy Committee, EEF believes that, whilst official figures may be overstating the extent of any slowdown, they reinforce the need to tread carefully, especially with continued rises in the costs of oil, energy and metals. However, it believes that calls for the Bank to indicate that rates have peaked are premature and would risk stoking up consumer spending and the housing market.

EEF Chief Economist, Steve Radley, said:

"With growing evidence of slowing consumer spending and housing markets, the Bank can afford to leave rates on hold. Rising oil and energy prices are likely to weaken economic growth at home and abroad, suggesting that we may be closer to the end of the current cycle than previously thought.. However, it is too early to say that rates have peaked and to signal that would be counterproductive"

Notes for editors

EEF, the manufacturers’ organisation (no longer referred to as the Engineering Employers Federation) is the representative voice of manufacturing in the UK with a federation of 11 regional Associations and ECIA, the Engineering Construction Industry Association.

EEF has a growing membership of almost 6,000 companies of all sizes, employing some 900,000 people from every sector of engineering, manufacturing, engineering construction and technology-based industries.

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