BOSSES have welcome the Bank Of England's decision to increase interest rates by a quarter of one per cent.

The Confederation Of British Industry says the gradual rise will help stabilise the economy but avoid damaging exports.

CBI South East Deputy Regional Director Malcolm Hyde said: "The Bank's steady strategy of gradual, well-signalled rises minimises the risk of collateral damage to our exporters and avoids unnecessary shocks.

"The UK economy is running at close to full capacity, with five consecutive quarters of strong growth.

"This means that rates are likely to have to rise further in coming months to reach a neutral interest rate of around five per cent.

"The continuation of the MPC's steady approach provides the economic stability that firms need and is the best way to ensure that interest rates peak at the lowest possible level."