Commenting on the Bank of England’s interest rate decision David Kern, Economic Adviser to the British Chambers of Commerce (BCC), said:

"The MPC's decision to leave interest rates unchanged at 5.25% was widely anticipated by the markets. We are naturally pleased that our members were not faced yet again with a further shock increase in interest rates. But it is important that, before contemplating additional increases, the MPC appreciates fully the acute pressures on British business resulting from the three increases in Bank rate announced already since August last year.

"We acknowledge that inflation is a problem, and we accept that the MPC may have to take further action. But monetary policy cannot affect the economy instantaneously. We believe that the cumulative effects of the three interest increases implemented in recent months, and of the marked appreciation in the value of sterling, will prove to be very significant.

"A significant slowdown in activity is highly likely later this year even if interest rates stay at 5.25%. The MPC must allow time for the measures taken already to work, before rushing to hike rates further.

"British business is committed to low inflation. But it is vital that we now have a period of stability in interest rates. We must avoid at all cost damaging monetary overkill. The MPC can afford to wait until trends in labour market become clearer."