BCC: Committee should maintain interest level

The British Chambers of Commerce (BCC) believes the Bank of England’s Monetary Policy Committee (MPC) should continue to keep interest rates on hold.

Thursday saw the MPC announce a decision to keep the interest rates at 0.5 per cent, the figure it has been since March 2009.

BCC Chief Economist, David Kern, said: “Given the current global economic backdrop, the decision to leave interest rates and QE (quantitative easing) on hold was not surprising.

“Business investment depends upon confidence, but the divergent actions of other major central banks – with the US Fed edging rates up and the ECB reducing them – is likely to increase the turmoil in the global financial markets and strengthens the argument for the UK to maintain a stable stance.

“UK inflation is likely to edge up very slowly, and our main priority should be to avoid any action that would put our fragile recovery at risk. Therefore, the MPC should keep rates on hold until much later in the year.”

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