Commenting on the Monetary Policy Committee (MPC) minutes, published today by the Bank of England, David Kern, Chief Economist at the British Chambers of Commerce (BCC) said:
“These minutes show once again a three-way split on the committee, with one member voting for a small increase in interest rates, another voting for an increase in QE, and the remaining seven members supporting a continuation of the existing policies.
“We understand the committee’s concern about the risks of higher inflation, and appreciate that in due course interest rates will have to increase. However it is important not to increase rates at a time when fiscal policy will soon be tightened, with higher VAT and large spending cuts planned for 2011.
“To increase interest rates at the moment would be a big mistake, escalating the risk of a setback to the economy. While we support the painful measures that the Government is taking to reduce the deficit, they will only succeed if economic growth continues. Interest rate increases should only be considered when the recovery is more secure.”
Hertschamber Chief Executive, Tim Hutchings, said, “ I agree with David, in fact I can see no case for raising interest rates for the foreseeable future. Although the figures are far from spectacular they are, nonetheless, showing some growth which needs to be nurtured if it is to be maintained over the coming year”.