MPC's Wadhwani praises economy

SUSHIL Wadhwani, arch dove on the Bank of England's monetary policy committee, has dramatically changed his colours by delivering a glowing assessment of the economy's prospects.

Describing the resilience of the global economy to the technology slump and 11 September attacks as 'awesome', Wadhwani said forecasts for growth could be lifted again.

'If the economy-wide capital stock overhang proves to be smaller than the consensus had feared, then it is not implausible to expect current forecasts for global economic activity to be revised upwards further,' he said in a speech to the Macclesfield Chamber of Commerce.

Wadhwani's remarks came a week after it emerged he voted to keep interest rates at 4% this month after consistently calling for lower rates for more than a year.

He also played down fears that record levels of consumer borrowing could trigger an early 1990s-style collapse in High Street spending and property values. 'While the rise in debt poses some clear risks, it is important that we do not exaggerate them,' he said. 'Debt-servicing ratios are below average and the debt-to-assets ratio has actually fallen over the last decade.'

On the exchange rate, which most economists feel is overvalued by roughly 10% against the euro, he argued strongly against keeping interest rates higher to dampen price rises should sterling suddenly fall.