Forum Brief: Interest rates

The Bank of England made the decision on Thursday to raise interest rates by 0.25 per cent.

Party Response: Conservatives

Shadow chancellor Oliver Letwin said: "I hope that the action being taken by the Bank of England will begin to calm the housing market, which clearly needs calming.

"I just hope that action by the Bank of England will be sufficient to counter-act the effects of the chancellor's policies, which are diminishing the appetite to save and encouraging risky levels of household borrowing.

"Whether monetary policy can, by itself, achieve this desirable effect without adverse effect on business remains to be seen."

Forum Response: Institute of Directors

Graeme Leach, chief economist at the Institute of Directors, said: "The Bank of England had to raise interest rates in order to stem the double digit growth in household debt and house prices. If the Bank of England hadn't raised interest rates they would have been guilty of negligence. We're about to enter a tense period which will decide whether the housing market slows with a hiss or bursts with a pop."

Forum Response: Construction Products Association

Allan Wilén, economics director at the Construction Products Association, said: "We appreciate the monetary policy committee's concerns over the strength of consumer borrowing, which underlies its decision to raise rates. However we would urge the Bank to take a cautious approach to any further rate rises.