News Release
Bank of England Raises Interest Rates by 0.25% to 6.75%
10 July 1997
The Bank of England's Monetary Policy Committee has today voted to raise the Bank's official dealing rate (the repo rate) by 0.25% to 6.75%. The increase takes immediate effect.
The combination of rapid expansion of domestic demand led by consumption and the further appreciation of sterling has sharpened the dilemma for monetary policy. The Monetary Policy Committee's task is to aim to balance nominal demand and the supply potential of the economy, in order to meet the inflation target and create the conditions for sustained growth of output and employment. Continued growth of output at well above trend rates would be unsustainable.
The Committee reviewed the latest monetary and economic data against the background of the Bank's Inflation Report published on 13 May and the 0.25% rise in official interest rates announced on 6 June. It concluded that the latest month's evidence - notably the upward revision of estimated output growth in the fourth quarter of 1996 and recent developments in monetary growth and retail sales - indicated that a further tightening of monetary policy was necessary, notwithstanding the further appreciation of the exchange rate and the contractionary effects of the recent Budget.
Minutes of today's Monetary Policy Committee meeting will be published on Wednesday 13 August. Minutes of the meeting held on 6 June will be published on Wednesday 16 July.
