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To: mishedlo who wrote (52010)	1/30/2006 4:26:52 AM
From: shades	Respond to of 110194

DJ BOE's Barker Makes Case For Rate Cut - Newspaper LONDON (Dow Jones)--The U.K. economy may need an interest rate cut to ensure the government's 2% inflation target over its two-year horizon is met, Kate Barker, a member of the Bank of England's monetary policy committee, said Monday. In an interview with the Guardian newspaper, Barker said the economy may lack the necessary "oomph" to ensure the inflation target is met. "You're starting from a position where to keep inflation on track in the longer term you do need to have growth picking up," Barker said. Inflation fell back to meet the 2% target in December for the first time in several months, having peaked at 2.5% in September. MPC member Stephen Nickell has voted for a rate cut in each of the last two months' interest rate meetings, but has been unable to convince any of the other eight members of the committee to vote with him. While giving a strong indication that she is now willing to consider voting for a rate cut, Barker defended her decision not to in the December and January meetings by saying that growth picked up in the fourth quarter. "In the short term, I'd like to say that one dog that didn't bark was the short-term inflation pressures from the wage round, but the other dog that didn't bark was that growth...did pick up in the fourth quarter," said Barker. According to the Office for National Statistics, the U.K. economy grew 0.6% in the fourth quarter, near to its long-term average. Throughout 2005, however, it grew at its slowest pace in more than a decade. "There are question marks about whether the pace of growth is going to prove strong enough, and this is the question for the February forecast round," said Barker. The MPC publishes its next quarterly inflation report, which will update its forecasts for headline inflation and growth, in February. Barker told the Guardian that she feels that the economy will eventually be strengthened by better business investment and exports, which will bring about a long-anticipated rebalancing away from a heavy reliance on the consumer. And she cautions that in the short-term inflation may still pick up due to the price of gasoline. "I would not necessarily sign up to the view that inflation will inevitably fall back over the next few months," said Barker. -By Corey Boles, Dow Jones Newswires; +44 207 842 9254; corey.boles@dowjones.com (END) Dow Jones Newswires January 30, 2006 04:21 ET (09:21 GMT)