SPIRALLING house prices and the British public's appetite for equity release has been a major cause for concern, according to the new Deputy Governor of the Bank of England.

Speaking to The Northern Echo in her first interview since taking the post, Rachel Lomax said there were almost daily discussions among some of the country's senior economists on the topic.

Ms Lomax, one of nine members of the Bank's interest rate setting Monetary Policy Committee (MPC), said: "It has been a major issue for the MPC for some time, also what effect that is having on the amount of money people are spending in the shops.

"It is one of the things we talk about all the time."

That statement echoed the ongoing consternation both among economists and politicians that people's seemingly gung-ho attitude to debt may need reining in.

It adds to speculation that rate rises are inevitable as the Bank battles to keep inflation at the 2.5 per cent level set by Chancellor Gordon Brown.

The MPC has been responsible for cutting interest rates to their lowest level for 48-years. It relies in part on information from the Office for National Statistics (ONS), the data gathering body.

The ONS has come in for stinging criticism in recent weeks over suggestions it has painted an inaccurate picture of the economy.

This in turn sparked fears that rates could be set to rise dramatically as the MPC fought to restore the UK economy to a stable footing.

Ms Lomax said: "The ONS has come in for a lot of criticism, some of which is unfair."

However, she did describe the information as a "puzzle" that needed to be "juggled" to determine hard information on the economy.

Ms Lomax is on a whistlestop tour of the Tees Valley to get industry's view of the economy.

Last night, she was due to dine with a cross-section of businesses before making a presentation today to the North East Chamber of Commerce. She also planned to meet manufacturing leaders and representatives from the chemical industry on Teesside.

She will deliver the message that the economy is in good shape and, with global markets also improving, will remain so in the future.

"This is a period of incredible stability," she said. "I really do not think there is any reason it is going to change. It is all about how we keep it stable. We are going to do what is necessary to keep inflation low and stable."