Expected Interest Rate Cut To 5.25% Vital But A Bigger Cut Is Needed
04 February 2008 in Chamber News
Commenting on the choices facing the MPC at its February meeting, David Kern, Economic Adviser to the BCC, said: “Global and domestic conditions have worsened since the MPC met last month. A cut in rates to 5.25% on Thursday is now urgently needed and widely expected. But this is no longer enough. To counter the mounting threats to the economy, we urge the MPC to cut interest rates to 5% as early as is practically possible. “Following the recent dramatic rate cuts in the US, we would welcome a bold UK move to 5% on Thursday. But, if this is thought to be too risky because it may be seen as signalling panic, the MPC could move to 5% in two rapid steps. It is critical, however, to avoid undue delay. The longer the MPC waits the bigger the danger that the situation will deteriorate, and the policy choices would become more difficult and even more unpleasant later in the year."