Commenting on the Monetary Policy Committee (MPC) minutes, published today by the Bank of England, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
These minutes are as expected. While one member has once again voted for a small increase in rates, the other members remain convinced that the right policy is to persevere with the current expansionary approach.
“The minutes show that the MPC is well aware of the downside risks still facing the economy. They also support the view that while inflation will remain temporarily above target because of the recent and forthcoming VAT increases, the balance of probabilities still shows a fall in inflation below 2% by early 2012.“British business needs a prolonged period of low interest rates to cope with the serious pressures still facing them, and to drive a lasting recovery. Given the domestic and international dangers, we urge the MPC not to contemplate any interest rate rise until mid-2011 at the earliest.”