30 January 2001, 15:27 UK economists say BoE rate cut now would be 'dangerous'
ONDON (AFX) - An imminent Bank of England rate cut would be
"dangerous", according to the Shadow Monetary Policy Committee of
independent economists.
The committee urged the BoE to hold the repo rate at 6.0 pct at its
Feb 8 meeting rather than opt for a cut as is widely expected.
After examining the state of the UK economy at its quarterly
meeting on Jan 18, it concluded no recession is in sight and credit
conditions are loose.
"Aggregate demand is still strong. Until a clearer picture of
weakening emerges, the unanimous decision of the committee was to keep
interest rates on hold."
Expectations of a pending UK rate cut rose last week after the
minutes for the BoE Monetary Policy Committee's last meeting showed
members voted by a close five to four to stick with 6.0 pct.
Last Friday's weaker-than-expected UK GDP data for the fourth
quarter further fuelled rate cut hopes. GDP was up 0.3 pct from the
previous quarter and 2.4 pct higher year-on-year, according to
preliminary National Statistics figures.
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