Commenting on today’s Monetary Policy Committee (MPC) decision, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“We have urged the Monetary Policy Committee to be bold and increase the Quantitative Easing (QE) programme to £325bn, and are disappointed that it has not taken action. Dampened domestic demand combined with the ongoing eurozone crisis have increased the challenges facing UK firms. We need a monetary policy that is expansionary as possible to avoid a setback and boost growth.
“Since the challenges facing the UK economy will increase in the first quarter of 2012, a further £50bn increase in QE to £325bn would be welcomed by hard-pressed businesses. An immediate increase in QE would strengthen confidence and help to contain sterling rises against the euro, at a time when we must maintain the competitiveness of our exports. Sterling has risen by some six percent against the euro in the last three months and this puts unwelcome pressure on British exporters.
“But QE will only achieve its full potential to support growth if it is supplemented by effective measures aimed at improving the flow of credit to viable businesses. The government must swiftly implement its promised credit easing measures, and the Bank of England should play its full part in supporting such an initiative.”