Commenting on today’s MPC decision, David Kern, Economic Adviser to the BCC, said:
"The MPC's decision today to cut interest rates to 5.25% was necessary for the economy. In the face of worsening global and domestic conditions, a refusal to act would have entailed unacceptable risks. Today’s move, though vital to sustain confidence, is not adequate on its own. The recent dramatic rate cuts in the US highlight the importance of early action. Threats to growth are much more acute now than risks of higher inflation, and we would have welcomed a bold UK move to 5% today.
"We understand the MPC’s reluctance to give a misleading impression of panic but it is critical that they avoid undue delay. While it is not necessary for the MPC to cut rates as aggressively as in the US, we must not forget that many of the problems facing the UK economy are similar to those confronting the US. To counter the mounting threats to the economy, we urge the MPC to cut interest rates to 5% in March."