Commenting on the MPC minutes, published today by the Bank of England, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“Although the voting at the September meeting was unchanged, the minutes suggest that the Committee is gearing itself up to increase the quantitative easing programme in the next few months. Business will see this as a welcome development. Although inflation remains a serious problem, the most immediate risks relate to weaker growth and the turmoil in the eurozone that may affect the banking system.
“We are pleased to see the MPC indicating willingness to explore policy options that have so far not been used. In particular, the lowering of interest rates below 0.5 percent and providing explicit guidance about their future likely course.“The BCC has repeatedly said that such guidance would help improve business confidence. Other options may also be worth considering. For example, more purchases of private sector assets – including securitised SME loans – and the imposition of negative interest rates on deposits held by commercial banks at the Bank of England. With weaker growth remaining a major risk at the present time, we urge the MPC to do everything possible to support growth and avoid a setback.”