Governor, Bank of England

Throughout the downturn, the saviour for retail sales has been that low interest rates have protected those in work from the full force of the recession. So if there’s one thing that retailers fear, it’s that the Bank of England will raise interest rates.

Through his chairmanship of the Bank of England’s Monetary Policy Committee, Mervyn King will be the one overseeing that decision. Fortunately, for retailers, the down-to-earth and likeable King - who received a knighthood in the Queen’s birthday honours this month - seems to be listening to the sector. Just last month he spoke at a Retail Week 100 Club breakfast for retail chief executives, and his openness and enthusiasm for taking soundings from the retailers present were warmly received.

He faces challenges, however. Inflation remains stubbornly well above the Government’s target rate of 2% - currently sitting at 4.5% - and while retailers are working hard to keep prices down, rising input costs in both food and non-food have put real pressure on retail prices. At present, the economy isn’t strong enough to support rate rises, but as the tool most likely to be used to control inflation, the question isn’t if the historically low level of rates will have to increase,
but when.