Lloyds TSB economist: Inflation influenced rates decision

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Lloyds TSB economist: Inflation influenced rates decision

Thu 8th May 2008

The chief economist at Lloyds TSB Corporate Markets has suggested that inflation was the key influencing factor in the Bank of England's decision to hold interest rates at five per cent today.

Trevor Williams stated that the threat of the current economic slowdown worsening could have persuaded the Bank's monetary policy committee to cut rates, but in the end inflation took precedence.

He predicted that the Bank will continue to hold rates until it has a clearer idea of where the economy is headed.

"Before deciding to cut rates again, it will want more evidence that the economy is slowing; more understanding of the effects of its recent efforts to revive credit markets; and crucially, a better view of whether rising commodity prices are pushing up consumer price inflation," Mr Williams said.

Earlier this week Lloyds TSB announced the launch of a new fixed-rate mortgage which allows customers to collect airmiles.

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