Interest Rates

Interest Rates increased by 0.25 per cent on Thursday. ePolitix Stakeholders commented on this rise.

Stakeholder Response: Institute of Directors

Graeme Leach, chief economist at the Institute of Directors, said: "The Monetary Policy Committee's decision to raise interest rates by 0.25 per cent was driven by three considerations.

"First, concerns regarding the knock-on effects of house price increases (housing wealth) on household consumption.

"Second, concern that measured GDP growth doesn't reflect the real impact of the increases in public spending (because of the difficulty in measuring public sector output).

"Third, that inflation may be at a turning point as the output gap (spare capacity) disappears and the effects of higher oil prices ripple out across the economy."

Stakeholder Response: Construction Products Association

Allan Wilén, economics director at the Construction Products Association, said: "The Monetary Policy Committee is obviously concerned over the strength of consumer borrowing and house price inflation, which underlie its decision to raise interest rates. 

"However, the rate rise will add to the cost pressures faced by industry.

"Our recent Construction Industry Trade Surveys show that the construction products industry is facing significant cost pressures, in particular from higher raw material prices.

 

"Furthermore, the surveys found that the UK’s poor transport infrastructure and high fuel costs were undermining the benefits of industry investment in raising productivity and containing costs.