By Claire West
Commenting on today’s Monetary Policy Committee (MPC) decision, David Kern, Chief Economist at the British Chambers of Commerce, said:
"The decision to leave interest rates and the quantitative easing programme unchanged was the correct one. However, uncertainty over future interest rate policy risks damaging confidence. Business will find it difficult to drive recovery without clear knowledge that interest rate rises are off the table for an extended period.
“Persistent dangers of a global economic slowdown, combined with the weaknesses still facing the UK, make it very important for the MPC to persevere with expansionary policies. Any consideration of raising interest rates must be postponed until there is more conclusive evidence that growth is secure. If the economy shows signs of renewed weakness, the MPC should not hesitate to increase the QE programme.
“The Government’s tough deficit-reduction measures, although necessary to repair the public finances, will increase the threat of an economic setback. Since sustaining the recovery must remain the priority, it is absolutely vital that the MPC maintains the current low level of interest rates until the middle of 2011 at the earliest.”