Like U.S., UK Mulls Interest Rate Hike Amid Inflation Worries

LONDON: UK businesses enjoyed healthy levels of growth in the fourth quarter of 1999, but there were signs emerging from some sectors that activity was slowing and inflationary pressures beginning to build, according to the British Chambers of Commerce (BCC) latest quarterly economic survey. The combination of a stronger exchange rate and higher interest rates dampened growth, while spiraling costs for raw materials and higher pay settlements stoked price rises, the BCC said. The BCC survey is one of the largest in the UK and is closely watched by policymakers for an insight into overall and regional economic developments. The fourth quarter survey comes against the backdrop of a sharp acceleration in consumer sector activity, which has already led the Bank of England Monetary Policy Committee to raise interest rates three times since September. Another 25-basis-point increase is expected at the February meeting.