RETAIL AND industrial lobby groups united yesterday to call on the Bank of England to ignore the feverish housing market and leave interest rates on hold later today.
Figures out yesterday showed that manufacturing, engineering and retail sales all suffered a slowdown last month. The gloomy news contrasted with Monday's Halifax survey that showed house prices surged by an all- time record of 4.2 per cent in May.
The reports, on top of a mixed batch of figures since its last meeting, leaves the Bank with the task of tackling a booming housing market and a manufacturing recession.
Most economists in the City - 24 out of 28 according to the most recent poll - expect the Bank's Monetary Policy Committee to leave rates on hold at their 38-year low of 4.0 per cent when it announces its decision at noon.
The case for no change was boosted by yesterday's figures. The high-street boom cooled down last month, according to the latest survey from the employers group CBI. It said the balance of retailers reporting a growth in sales volumes almost halved to 25 per cent from April's 57 per cent.
"All the evidence in [the] survey points to a gradual slowdown in consumer spending," said Alastair Eperon, the chair of the CBI's survey panel. "There is no necessity for the Bank of England to increase interest rates [today]." The Engineering Employers' Federation, which published a gloomy economic survey yesterday, agreed. Stephen Radley, its chief economist, said: "The MPC must continue to ignore the clamour for higher rates from those who see inflation lurking round every corner and wait for concrete evidence of a strengthening recovery before acting."
Its survey showed output and orders fell over the latest three months for the fifth successive quarter. …