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 decision to maintain QE at £375bn and hold interest rates at 0.5% was taken unanimously, which was unsurprising. Although the MPC would like to implement the existing programme before taking new steps, the ONS’s figures, which show three consecutive falls in GDP since the end of last year, have increased demands for more QE. We still believe that increasing QE at the current time is unnecessary and would not deliver help where it is needed most.“By focusing exclusively on purchasing gilts, QE has so far only offered marginal benefits to the real economy. Instead, more emphasis should be put on measures to support a recovery in business lending. The MPC and the government should rely on tools other than conventional QE. The new Funding for Lending scheme could be effective as long as the banks pass on lower funding costs to their customers. But this must be supplemented by the purchase of assets other than gilts, and by the establishment of a state-backed business bank.”