CBI: US rate cut could create inflation risk

19 September 2007
The director general of the Confederation of British Industry has suggested the recent interest rate cut in the US could have an impact upon the UK.

Speaking to BBC Two's Newsnight programme, Richard Lambert said that the US Federal Reserve's decision to cut rates to 4.75 per cent was a "very abrupt change".

The move could potentially pose inflationary risks for the UK, Mr Lambert told the programme.

"We are in a slightly different place here in the UK. The economy here is still strong and there are still inflationary risks in the system," he said.

Responding to the latest figures revealing consumer price inflation fell to 1.8 per cent in August, Simon Ward, chief economist at New Star Asset Management, said by contrast the retail prices measure rose to 4.1 per cent.

This, he argued, was due to mortgage bills rising by 30 per cent over the course of the previous 12 months.

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