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

“Businesses will be supportive of the MPC’s decision to leave interest rates and the quantitative easing programme unchanged. Given the fragility of the recovery, and the acute pressures facing businesses and consumers, the Committee was right to reject demands for early rate increases.

“With UK inflation more than double its two per cent target, and likely to increase further in the next few months, it’s natural for the MPC to feel uneasy. Tightening policy in reaction to internationally generated inflation and higher utility prices would have been a big mistake. Premature rate increases, at a time when the Government is tightening fiscal policy, could seriously harm jobs and growth.

“Worrying signs that the global economy may be slowing reinforces the case for postponing interest rate increases. As long as domestic wage pressures remain muted, the MPC should hold its nerve. We are hopeful that the balance of opinion within the Committee will move further towards this direction.”