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Monday, 30 July, 2001, 21:13 GMT 22:13 UK
Consumer credit boom continues
Credit cards
Consumers continue to hit their credit cards
UK consumers continued their recent borrrowing spree in June.

Consumer credit grew by 1.3bn, the same level as May's record - and some way ahead of City forecasts.

The latest figures, released on Monday, will reduce the prospect of a further cut in interest rates when the Bank of England's Monetary Policy Committee (MPC) meets on Wednesday.

The Bank said that 106,000 new mortgages were approved in June, compared with an average of 103,000 in the three months to May.

Caution

Interest rates have been held at 5.25% for two months despite the threat of a recession hanging over manufacturers.

The MPC is concerned a cut could stoke high-street spending.

Recent retail sales data has suggested that the spending boom may have slowed.

But economists believe the borrowing figures mean the MPC will err on the side of caution.

The Credit Card Research Group also released figures on Monday, showing payment card spending totalled 16.5bn in June, 19% higher than a year earlier and 5% up on May.

Jeremy Hawkins, chief economist Europe at the Bank of America. "The Bank is worried a cut could fuel domestic demand and pose inflationary risks.

"These figures reduce the likelihood of interest rates being cut."

See also:

31 May 01 | Business
UK consumer credit hits record high
10 May 01 | Business
UK trims rates 0.25%
23 May 01 | Business
Big majority for UK rate cut
21 May 01 | Business
UK trade deficit hits record high
16 May 01 | Business
UK inflation to remain low into 2002
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