By Claire West
Commenting on the quarterly Inflation Report, published yesterday by the Bank of England, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“The new Inflation Report, and subsequent comments by the Bank Governor, suggests that the MPC is expecting inflation over the next two years to be higher than they predicted in August, and growth to be slightly higher than the historical average. On the basis of this assessment, the prospect of an early increase in QE has diminished.
“However, due to the risks facing the economy, we believe it is important for the MPC to keep the possibility of adding to the QE programme under active consideration, while keeping interest rates at very low levels for an extended period. The growth forecast in the Inflation Report could be over-optimistic in our view, and may not fully take into account the negative effect that the Government’s deficit cutting plan will have on the economy. Businesses and consumers will face serious pressures in the months ahead, and it is important to ensure that risks of a downturn are averted as a matter of priority.”