CBI responds to latest UK interest rate decision

Anna Leach, Deputy Chief Economist at the CBI, said: “The interest rate decision was a tricky one for the MPC, taking place against the backdrop of recent global financial market turbulence, a surprise rise in domestic inflation and a Budget which provided more support for the economy.

“The choice to raise rates to 4.25% comes against a backdrop of stronger-than-expected activity so far this year, and strong domestic inflation.

“The MPC will also have an eye to the recent turmoil in the banking sector. While financial stability is the remit of the FPC, an excessive tightening in credit conditions for businesses and households arising from financial market turbulence could cause the MPC to reconsider the level of interest rates in future months.”