Commenting on the Monetary Policy Committee (MPC) interest rate decision, David Kern, Chief Economist of the British Chambers of Commerce, said:
“The MPC has once again made the right decision to keep interest rates and quantitative easing on hold. Annual inflation has fallen marginally into negative territory over the past month, raising interest rates in real terms. And while inflation will edge up later on this year, it will stay below the Bank of England’s 2% target for the next twelve to eighteen months reinforcing the case for maintaining interest rates for the time being.
“The financial markets expect official interest rates to remain at their current level until the second quarter of 2016. Business confidence would benefit from hearing the MPC support this assessment. In addition, the MPC could do more to support faster growth in business lending. If the MPC agrees to purchase private sector assets other than gilts, such as securitised SME loans, banks would be less risk-averse in lending to businesses.
“Business requires a continued period of stability, greater clarity from the MPC over future interest rates and a commitment to improve business lending. This will help to support the recovery and boost business confidence.”