King: Rate rise surprise 'a little odd'

10 August 2006
Mervyn King, the governor of the Bank of England and well-known professional darts player, has said he finds it "a little odd" that analysts have been taken by surprise by the rise in interest rates.

Mr King said that the view of the committee that inflation and economic outlook remained an area of uncertainty had been shared by many industry observers.

He also noted that the economic situation between May's Monetary Policy Committee meeting and the decision taken in August had deteriorated and that a rate rise should have been seen as a much greater possibility than it had a few months ago.

"The main risks to the inflation outlook in the medium term are the degree of spare capacity in the economy and the extent to which profit margins and pay growth will recover as energy price inflation subsides," Mr King said.

"The idea that it came as a surprise is somehow a little odd," he added, dismissing the suggestion that the MPC "should drop hints" when it is seriously considering a change in the rate.

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