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Article: Another turn of the screw; Interest rates.(The interest-rate rise)
- Article from:
- The Economist (US)
- Article date:
- February 7, 2004
CopyrightCOPYRIGHT 2004 Economist Newspaper Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Why the Bank has raised rates despite low inflation
THE Bank of England tightened monetary policy a further notch on February 5th, raising the base rate from 3.75% to 4%. The 48-year low of 3.5% reached last July is now receding into folk-memory.
The decision had been widely expected: the surprise would have been if the Bank had sat on its hands. Yet in America, the Federal Reserve is keeping the base rate at 1%; in the euro area, the European Central Bank is under pressure to cut rates from 2%. So why is the Bank of England, which was first to turn the screw last November, ahead of the game again?
The main reason is that Britain weathered the ...