“UK businesses will welcome the MPC’s decision to leave interest rates unchanged and maintain the current level of quantitative easing. Inflation, though well above target, saw a fall to 4% in March, and combined with subdued wage pressures, the arguments for an increase in rates have weakened considerably in recent weeks.
“The latest figures suggest growth has been relatively flat over the past six months, with data this week indicating that the rate of recovery in the manufacturing, construction and service sectors has slowed. In this environment, maintaining low interest rates is essential to allow businesses to grow, create jobs and contribute to an economic recovery. Relatively high UK inflation is mainly being driven by international factors that are adding to the acute pressures experienced by businesses and individuals.
“At a time when the Government is tightening fiscal policy through its deficit-cutting programme, premature rate increases could have a severe impact on growth and jobs. In the face of major global and domestic uncertainties, we believe the MPC should keep interest rates on hold over the next few months, and avoid taking any action that may risk derailing the recovery.