Commenting on today’s Monetary Policy Committee (MPC) decision, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:

“UK businesses support the decision by the MPC to leave interest rates and the quantitative easing programme unchanged. Given the fragility of the UK recovery, the acute pressures facing businesses and individuals, and the clear risks of a slowdown in the global economy, we expect the Committee to maintain interest rates at their current low level at least until the early months of 2012.
“Though UK inflation fell to 4.2 per cent in June, we expect an increase over the next few months. While the MPC is naturally concerned by rising prices, tightening policy in reaction to higher utility prices and internationally generated inflation would be a major mistake. As long as domestic wage pressures remain muted, the MPC should avoid any action that increases risks of an economic setback.

"Since the government must continue to tighten fiscal policy in order to deliver its deficit-cutting programme, every effort must be made to sustain the recovery. If the economy weakens further, the MPC should not hesitate to increase the QE programme above £200 billion.”