Businesses welcome decision to maintain low interest rates
Commenting on today’s Monetary Policy Committee (MPC) decision, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“Businesses will welcome the MPC’s decision to leave interest rates and quantitative easing programme unchanged this month. Until the recovery is more secure later in the year, interest rates should be kept at current levels. A premature increase could have an adverse affect on growth and jobs, particularly in the services sector.
“An increase in rates looks increasingly likely over the next two to three months, and so the focus must be on minimising the harmful effects this could have on the economy. A modest increase in rates is unlikely to unleash a new recession, but the Government must use the Budget to introduce policies that will support growth.
“While the MPC cannot forecast its future actions, the way it currently communicates can create uncertainty. The MPC must address this in order to give businesses and market analysts a greater degree of predictability. Since higher inflation is unavoidable in the near term, it is important that the MPC does not over-react. If interest rates increase in the next couple of months, businesses must be reassured that future policy changes will not threaten the fragile recovery.”