THERE was scepticism when the Chancellor handed over control of interest rates to the Bank of England's independent Monetary Policy Committee.

Seven years on, few commentators have had cause to doubt the wisdom of such a move.

That is not to say, however, that the MPC is above criticism.

Yesterday's rise in interest rates - the fifth in ten months - is without justification.

In essence, inflation is the measure by which the MPC controls interest rates. And at 1.6 per cent, inflation lies well within the 2.0 per cent target set by the Bank of England.

While concerns persist that the housing market and consumer spending continue to boom, surely the MPC has a duty to ensure that previous rate rises had have time to have an impact on the economy.

Of course, there is evidence of an upturn in the economy. But growth in manufacturing still seems weak, and the volatility in oil prices suggests that any recovery in the UK economy may still be fragile.

To raise interest rates at this particular time is unduly cautious.

While the South-East and Home Counties will be able to shrug aside yesterday's rise, the North-East economy, with such a strong dependence on manufacturing and exports, will be more sensitive.

Control of interest rates is a very blunt instrument with which to guide the national economy. It has to be use wisely. On this occasion the MPC has acted unwisely and with undue haste.