U.K. CENTRAL BANK WARNS OF EXCESSIVE RATE CUTS
Bank of England governor Robin
Leigh-Pemberton said lowering interest rates too fast could
jeopardise recent economic achievements in the U.K.
    In remarks prepared for delivery to businessmen in
Birmingham, he said prospective returns on real investment are
more favourable, relative to those on financial assets, than
for a good number of years.
    "It would surely be foolish to put that favourable
conjuncture at risk by lowering interest rates prematurely or
excessively," he said.
    "We might enjoy a short-term boost to activity, but at the
risk of a damaging return to the uncertainty and acrimony of
high inflation," he added.
    Leigh-Pemberton said he recognised there are some who would
argue that interest rates are still too high and deter
investment in industry.
    "But we should not forget that less than a year ago we were
intervening to support sterling and had some temporary
difficulty in persuading the markets that a one pct increase in
base rates, to 11 pct, was a sufficient tightening of policy at
the time," he added. Base rate is currently nine pct.
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