Commenting on the choices facing the MPC today, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:

“Although we do not expect the MPC to announce policy changes at today’s meeting, the Committee must consider measures aimed at helping the UK to start a sustainable recovery without delay.

“Given the need to maintain Britain’s international credit rating, it would be too risky to increase the QE stimulus beyond £200bn. However, the MPC must make more determined efforts to remedy the persistent weakness in bank lending to businesses. The problems facing credit-worthy small and mid-sized firms, trying to obtain adequate finance remains a major obstacle delaying Britain’s exit from recession. 

“While solving this problem requires the Government to become involved, the MPC could make a significant contribution by imposing a negative interest rate on deposits held by commercial banks at the Bank of England, to discourage the hoarding of cash while providing an incentive to lend to viable businesses.”