• The MPC must help to boost lending to business
Commenting on today’s Monetary Policy Committee (MPC) decision, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“UK businesses welcome the MPC's decision to increase the QE programme to £275 billion. In the face of the risks facing Britain’s recovery, it is important to make every effort to underpin business confidence and avoid a setback. However, higher QE on its own is not enough, and we urge the MPC to look at other radical methods. The Chancellor’s intention to use credit easing methods to help stimulate the flow of credit in the economy is a welcome initiative, but its implementation will take time and the MPC is better placed to move more quickly.
“There is a strong case for the MPC to help boost bank lending to businesses by immediately raising its purchases of private sector assets. For QE to be truly effective, it is critical that the additional funds should urgently go into the real economy. The Committee should also impose negative interest rates on deposits held by commercial banks at the Bank of England, which could help to boost the availability of credit.