Rate rise 'will hamper economy'

The Bank of England’s rate setting committee is expected to increase the base rate 0.25% to 5.5%. “But the Bank needs to beware of overkill,” warns Simon Ward, chief economist as New Star Asset Management. “The three earlier hikes coupled with a 5% rise in the exchange rate over the last year have tightened monetary conditions significantly. There are signs that growth is beginning to slow, while inflation news is set to improve. A move beyond 5.5% would risk unnecessary economic weakness in 2008.” Tomorrow’s rate rise is inevitable, agrees Neil MacKinnon, group economist at mutli-curre...