Commenting on today’s Monetary Policy Committee (MPC) decision, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“Businesses will welcome the MPC’s decision to leave interest rates and the quantitative easing programme unchanged this month. While the concern over inflation is understandable, we believe that interest rate increases should be postponed until later in the year, when the recovery is more secure.
“An increase in rates still looks a distinct possibility over the next two to three months. But we are pleased that market expectations for an imminent move have eased slightly since the last meeting, in the face of serious international and domestic uncertainties. Higher UK inflation is mainly being driven by international factors that are adding to the pressures facing businesses and individuals.
“Premature rate increases will have negative effects on growth and jobs. With wage increases remaining subdued, we strongly urge the MPC to hold its nerve and avoid taking any action that may risk derailing the recovery, at a time when the Government is tightening fiscal policy through its deficit-cutting programme.