Commenting ahead of the MPC decision on Thursday, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
"With the government's tough deficit-cutting measures squeezing domestic demand, and problems in the eurozone creating difficulties for our exporters, UK monetary policy must remain as expansionary as possible. We believe that UK GDP will still record weak positive growth in Q4 2011, but the challenges in the first quarter of this year will increase. Therefore, it is vital for the MPC and the government to adopt measures to offset negative influences and help stimulate the economy.
“A further £50bn increase in the Quantitative Easing (QE) programme, to £325bn, will limit adverse effects on domestic demand. It will also provide support to exporters by helping to keep the sterling exchange rate competitive. Many commentators expect the MPC to wait until February before acting, but we believe that an immediate announcement would boost confidence and ease concerns over the situation in the eurozone. However, the QE programme alone will not achieve its full potential to support growth without credit-easing measures that would improve the flow of credit to viable businesses.”