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Pastimes : The Hot Button Questions:- Money, Banks, & the Economy

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To: maceng2 who wrote (622)	6/19/2004 10:08:37 AM
From: maceng2	Read Replies (1) of 1417

BoE member says interest rates increasing reuters.co.uk LONDON (Reuters) - Bank of England policy maker Richard Lambert says the interest rate cycle is edging up but denies the Bank has abandoned its gradualist approach to raising rates, a newspaper says. "The interest rate cycle is edging up... I don't agree with those who say we have abandoned gradualism. Nobody ever said gradualism meant once a quarter on the dot," Lambert, a member of the Bank's rate-setting Monetary Policy Committee, told the Guardian in an interview published on Saturday. The Bank of England made its first back-to-back interest rate rise in more than four years earlier this month, pushing its key repo rate up to 4.5 percent, leading economists to say the bank had abandoned its gradualist approach to setting interest rates. The previous three interest rate hikes since November had also been for a quarter point but had come at three-monthly intervals. However, Lambert signalled that further rate rises may only be modest. "The period of rock-bottom interest rates is passing. The financial markets are expecting further reasonably modest rate increases over the coming months and unless the world changes, that does not seem to be an unreasonable thing to be expecting," he said. Lambert reiterated the Bank's line that it does not target house prices, and said it did not want to use interest rates to shock people. "I don't know what interest rate would be necessary to stop the house price juggernaut, but it would be one that would have damaging consequences for the British economy as a whole," he said. Lenders' surveys have shown UK house price inflation running at around 20 percent. Lambert also downplayed the impact of high oil prices on inflation, which the BoE aims to keep at around two percent over the medium term. "I don't think the latest move (in oil prices) is going to have a huge impact on inflation expectations two years out," he said.

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