Interest rates rise likely as retail boom continues

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Interest rates rise likely as retail boom continues

LONDON, UK - Following the publication of new data showing that retail consumers continued to spend hard in January, the Bank of England appears to be increasingly certain to raise interest rates by a quarter point this week.

Retailers enjoyed their best month for sales since April 2002, according to the findings of the latest survey of distributive trades by the CBI.

Ian McCafferty, chief economist at the CBI, has predicted that strong growth in sales would continue this month, although he pointed out that recent trading announcements had indicated that performance remains heavily 'store or sector-specific'.

Analysts now believe that the results of the poll, based on responses from 20,000 retail outlets, will effectively drive the Banks Monetary Policy Committee further towards an interest rate rise when it begins its two-day meeting today.

Richard Iley, an economist at BNP Paribas, the investment bank, told The Times that the survey presented further evidence that the consumer side of the economy remained too strong.

"Coming just days before the latest MPC meeting, this buoyant survey underlines that Novembers quarter-point rise had had little, if any, impact on consumer behaviour. It gives a cautious committee a green light to push through another pre-emptive rate rise," said Mr Iley.

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