The British Chambers of Commerce (BCC) is urging the MPC to cut interest rates by half a point on Thursday to 4 per cent, with a further half point cut to 3.5 per cent by Christmas.
While others have called for a full point cut on Thursday, Chief Economic Adviser to the BCC, David Kern, is raising concern that if the MPC cuts too much too soon then the long term economy could suffer if the recession deepens.
David Kern said:"In the face of serious recessionary pressures, we urge the MPC to cut interest rates to 4 per cent on Thursday. Failure to cut rates by half a point would damage confidence.
“We also expect the MPC to make additional interest rate cuts in the following months, to 3.5 per cent before Christmas, and to 3 per cent early in 2009.
"The MPC must follow a deliberate strategy of cutting rates steadily and forcefully, without lurching into sudden emergency measures that may unsettle the markets and undermine confidence. The recession is likely to be prolonged, and the MPC must not use up all its bullets too early.”