THE CBI has responded with disappointment to the Bank of England's interest rate increase, which was announced on Thursday.

Malcolm Hyde, the CBI's South East regional director, said: "Businesses across the region will be disappointed by this increase, but will be hoping that a modest rise now will remove the risk of a more significant increase later in the year.

"The decision was always going to be a close call, given the recent data for output growth and price inflation.

"We will have to wait until the Inflation Report to understand how the Bank’s thinking has changed, and what led to a decision that has come as a surprise to the markets.

"Even a small interest rate rise can damage business confidence and in particular investment decisions."