IoD chief economist calls for bank rate increase

With inflation in the UK running at 2.4 percent the likelihood of the Bank of England increasing interest rates by at least a quarter percent to 5 percent is pretty much on the cards in four days time.

Further support for a rate increase came from an unlikely source, the chief economist at the Institute of Directors (IoD).
   
In the Telegraph Graeme Leach is quoted as saying that the results of the IoD’s own recent survey due out on Wednesday showed a ‘rising business optimism’ and ‘extremely tight capacity utilisation’

In other words the economy has very little slack left in it, so any future gains are likely to push up wages and inflation.

Leach goes on to say that “ Our survey does pour more fuel on the inflationary fire” and that “This is yet another reason for the Bank of England to raise interest rates”.

With the IoD representing Directors and Board members across the UK it is highly unusual to hear such sentiment from businesses organisations.

For the first time in a while the patient is advising the doctor. As previously think that the Bank of England should take stronger pre-emptive action on spending and inflation by increasing rates by, not the expected 0.25 percent, but by a ‘sit up and listen’ 0.5 percent.

Source Sunday Telegraph