Spending 'slowing down as anticipated'

Monetary Policy Committee member, Kate Barker, has played down the potential impact of the consumer spending slowdown in an interview published today by Real Finance magazine.

"At the moment, the evidence we have from the autumn doesn't suggest that consumer spending is slowing down more dramatically than [the Bank of England's] forecast," she said.

The Bank's forecasts for the year ahead are "rather more subdued" than those of Chancellor Gordon Brown, Barker said, and had already factored in slower growth in consumer spending.

The two-term member of the interest rate-setting committee also played down the impact of falling house prices on future interest rate decisions.

"The housing market is important to the [inflation] target.

"Because of the relationship between what house prices do and how consumers respond, increased house prices tend to encourage people to spend more - although it's been a less strong relationship in the last few years than in the past.

"Our decisions take into account a vast number of variables. Look at last spring. People were saying we were raising rates because we were worried about the housing market.

"Just as important for me in that decision was the fact that wage increases were also picking up quite rapidly at the time."