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Bank economist 'agnostic' on rate-cut forces

Rising inflation means that the Bank of England will have tough decisions to make over interest rate cuts, a member has suggested.

In an interview with the Daily Mail newspaper Tim Besley said that he was "agnostic" over whether inflation and an apparently slowing economy provided the bigger risk.

The two risks pose contradictory pressures to interest rates: times of economic slowdown generally point to rates being cut, while inflation tends to lead to rates staying static or rising.

Mr Besley is one of the nine members of the Bank's Monetary Policy Committee - which sets the base rate of interest each month.

His decision, therefore, has a direct impact on how much personal loan, credit card and mortgage repayments cost.

The Confederation of British Industry (CBI) also said yesterday that retail sales fell last month in a sign of increasing inflation, Reuters reports.

Furthermore, a new YouGov survey cited by the news agency shows that the inflationary trend is set to continue above the Bank's two per cent annual target.

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