Commenting on the MPC minutes, published today by the Bank of England, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“The minutes confirm that the decision earlier this month to leave rates on hold at 0.5% and to increase the QE programme from £200-275bn was unanimous. The discussion which took place before the decision shows the committee was aware that global economic circumstances have worsened, and that the UK is facing a period of weak growth in the next few quarters.
“We agree with the committee’s judgment that inflation is now near its peak, and is likely to fall steadily throughout 2012. While we support the decision to increase the QE programme, we are disappointed that the MPC is still reluctant to purchase private sector assets which could help improve the availability of credit to businesses. Unless the increase in QE is supplemented with credit easing measures, its effectiveness is likely to be diminished.
“While the Chancellor has indicated his intentions to implement additional credit easing in the future, this will take time. We hope that the MPC will reconsider its position and adopt such measures before the Chancellor is able to step in. In light of the risks facing economic growth, every effort must be made to counter the threats facing the UK’s recovery.”