• The MPC must reassess its reluctance to purchase private sector assets
Commenting on today’s Monetary Policy Committee (MPC) decision, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“The MPC’s decision was not surprising, following the unanimous vote at the last meeting in favour of increasing the QE programme and keeping interest rates on hold. Businesses across the UK are supportive of the MPC's recent actions. With serious risks facing Britain’s recovery, it is important to do everything possible to underpin business confidence and avoid a setback, and recent moves by the MPC are a good start.
“However, higher QE on its own is not enough. Without effective measures to improve the flow of credit to businesses, particularly smaller firms, the increase in QE will not achieve its full potential in supporting growth. We would urge the MPC to be more proactive in helping to achieve this.
“While we expect the Chancellor to announce a comprehensive credit-easing programme in his Autumn Statement, it is vital that the MPC reassesses its reluctance to become more actively involved in this area. Since the MPC can move more quickly, there is a strong case for it to help boost bank lending to businesses by immediately raising its purchases of private sector assets.”