Commenting on the MPC minutes for December, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“As expected, the minutes from the latest meeting of the Monetary Policy Committee (MPC) show that it voted unanimously to maintain interest rates at 0.5% and the Quantitative Easing (QE) programme at £275bn. The committee is right to highlight that the major problems facing the eurozone pose a significant threat to the UK. While we have not yet seen these risks crystallise, concerns that the situation will worsen are affecting the ability of banks to fund themselves smoothly.
“Given the risks facing the economy in the near future, with minimal growth set to continue and unemployment likely to increase, the MPC should expand QE by a further £50bn early in 2012. Increasing QE would help to sustain demand in the economy, and keep the exchange rate at a competitive level. However, the impact of more QE would be enhanced significantly if the government swiftly implements the credit easing programme, improving the flow of lending to viable businesses.”