Commenting on today’s MPC decision, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
"The markets anticipated the MPC’s decision to keep interest rates unchanged. However, the recession remains severe and business is concerned that the quantitative strategy has not been effective so far.
“Yields on gilts and corporate bonds are still too high, and the growth of money held by industrial and commercial companies is too weak. It is important that the MPC acts vigorously to remedy these shortfalls. They must accelerate the asset purchase programme, and start implementing the second £75 billion instalment. A bigger proportion of the funds should be allocated to purchasing private sector paper.“Inflation is a long-term risk and the MPC needs to present a convincing exit strategy. But, alleviating the recession must be the immediate priority and this means the MPC must execute the quantitative policy more forcefully.”