By Claire West
The Bank of England Monetary Price Committee met today and decided to keep interest rates the same but decided against further Quantitative Easing despite the US entering into what they are calling QE2.
We caught up with Gerard Burke, founder and MD of Your Business Your Future who commented that;
“Not sure that they could do anything else, but leaving interest rates the same is good news for business as it will keep the value of the pound low, driving exports and boosting the economy.
It’s interesting that they have chosen not to do more quantitative easing that may signal a desire to show an underlying confidence in the ability of the economy to continue to grow. The really big question is what is going to happen to the US economy as their total QE is close to our GDP.”
David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
"The decision to leave interest rates and the quantitative easing programme unchanged this month is not surprising. Until a few weeks ago, many analysts expected an increase in QE. But, following the publication of strong GDP figures for the third quarter of 2010, it was clear that the MPC would find it difficult to take such a decision in November.
“Nevertheless, we believe there are strong arguments for injecting additional QE into the economy over the next few months. As VAT increases to 20% in January, and the deficit-cutting programme moves to a higher gear in 2011, risks of a setback will inevitably worsen.
“While we support the painful measures needed to stabilise Britain’s public finances, every effort must be made to minimise the danger of a new economic downturn. In the foreseeable future, threats to growth will remain much more serious than the risks of higher inflation, and the MPC must act accordingly.”