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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who started this subject	9/17/2003 3:43:39 PM
From: russwinter	of 110194

Bank of England discussions hint at rate rise to come Wed Sep 17, 7:45 AM ET LONDON (AFP) - Concerns about consumption growth and soaring consumer debt could prompt a rise in British interest rates in the near future, minutes of the last Bank of England policy meeting indicated. The nine members of the central bank's monetary policy committee (MPC) voted unanimously on September 4 to keep interest rates steady at the current 48-year low level of 3.50 percent, a record of the meeting showed Wednesday. However some policymakers pondered the need for a possible rate rise. "For most members this decision was clear cut, although for some it was more finely balanced," the minutes said. "Concerns about the longer term sustainability of the current pace of consumption growth and household debt accumulation also suggested to some members that an increase in the rates might soon become necessary." In July -- the month when interest rates were lowered to 3.50 percent -- British consumers racked up the biggest increase in total borrowing ever recorded, according to Bank of England figures. Retail sales have also risen, with a particular surge in June prompted by hot and sunny weather causing concern that inflation could climb even further above government targets. The extent of total domestic demand had caught policymakers somewhat by surprise, the MPC minutes conceded, saying that demand had been "substantially stronger than was embodied in the August central projection." However the MPC noted that market interest rates had already firmed a little. "That would restrain consumption growth somewhat, even in the absence of an immediate increase in official rates," the minutes said. Despite concerns about a recovery in the euro zone, MPC members appeared positive about the progress of the global economy. The minutes said that "for most members, the near term downside risks to world activity appeared to have receded in the past month and the projected recovery -- at least in the second half of this year -- now seems to be more assured."

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