Bank of England urged to keep interest rates low

Leading economic advisers warn of the dangers of a rise in interest rates.

Leading economic advisers warn of the dangers of a rise in interest rates.

The Bank of England should avoid raising interest rates in order to avoid endangering the economic recovery, an influential economics forecaster has said.

The Ernst & Young Item Club has urged the bank to stay firm against temporary pressures such as the VAT rise.

Accoutnancy and consulting firm Deloitte has warned of a "bumpy road to recovery", saying it expects GDP growth this year and next of just 1.5%.

However, the Item Club forecasts UK GDP growth of 2.3% this year, rising to 2.8% in 2012.

The Bank has been told to control inflation, which has exceeded the target set out by the Consumer Prices Index (CPI) of 2% and now stands at 3.3%.

The inflation rate as measured by the Retail Prices Index (RPI) is currently 4.7%.

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