David Kern, BCC Economic Adviser said:
"The new OECD report increases the prospect that UK Bank Rate may rise to 5.75% as early as next month. There is also a serious danger that the challenge to the MPC's credibility implicit in the OECD report may trigger an overreaction, with damaging consequences for British business.
"The OECD was right in its analysis. UK inflation has worsened more than in other G7 economies, and the MPC has had to react firmly. But we are now approaching quickly the point where there is an increased danger of harmful monetary overkill.
"We accept that Bank Rate may have to go up before long to 5.75%, even though the objective facts do not support further tightening. UK inflation is set to decelerate sharply over the coming months, while wages remain broadly under control. UK inflationary expectations have not worsened unduly, and will almost certainly improve.
David Kern concluded: "British business is already experiencing pain as a result of the four Bank Rate increases implemented since last August. The 1.3% fall in Q1 2007 business investment may reflect the damaging effects of successive interest rate hikes. The pressure on business will inevitably worsen. While we support the MPC's aims, we urge it to react to the facts and to disregard misguided challenges to its credibility."