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New adviser, yes, but change in thinking, no

Another day, another interest rate decision and another sigh of 'well, we saw that coming'. The Bank of England has kept interest rates at an historic low of a half of one per cent for the 27th month in a row in a move which wouldn't have taxed Derren Brown much more than guessing the winners in yesterday's horse racing with a copy of today's paper.

As you may have picked up, it wasn't exactly unexpected, what with inflation hawk Andrew Sentence having left the Monetary Policy Committee to be replaced by Ben Broadbent, the former Goldman Sachs economist.

But look at Broadbent's past research at Goldman and it's clear to see that he might think along the same lines as his predecessor. He had pencilled in a 25 basis point rate rise in May, two more before the end of the year and a further four in 2012. Obviously last month's rate rise didn't come off but it's clear Broadbent had a fairly robust view of the UK economy, although that's probably been tempered by the lukewarm set of economic data emerging from across the economy.

But speaking to economists at home and further afield, it's clear the majority believe that this year will see a rate rise at some stage, whether at the end of the summer or closer to Christmas.

If it's not a resurgent economy that prompts this move then it will be an even bigger jump in inflation which is already hovering at the increasingly toppy looking 4.5%.

Of course, the fear is that even if the bank does raise rates, inflation will stay high and nobody wants that because then it'll be expensive to borrow money and expensive to live and that is good for neither consumer or business.

But the more pertinent worry for us in Northern Ireland is that the wider UK economy will recover quicker than our own. Latest PMI readings show the Northern Ireland economy is the only region in the UK still contracting, so a hike in interest rates across the whole of the region could leave us with the double whammy of a shrinking economy and higher borrowing costs. Again, nobody wants that.

Which brings us on nicely to David Cameron's visit yesterday. His words of positivity about the future of Northern Ireland are great to hear but he needs to be wary that an all-encompassing economic policy may need tinkering with in a region such as Northern Ireland.

As economies go we're still in a fragile state and need all the help we can get. But come back soon Dave because, as the song said, 'there's a whole lot of work to be done'.

'Even if the bank does raise rates, inflation will stay high and then it will be expensive to borrow money and expensive to live - and that is not good'


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