By Daniel Hunter
Chief Financial Officers (CFOs) of the UK’s largest companies have expressed strong support for the Bank of England’s performance on inflation, the pound and providing monetary stimulus to the economy, according to research by Deloitte.
Deloitte surveyed 136 CFOs from large UK businesses in a special section of its quarterly CFO Survey, due to be published on Tuesday 9 July.
93% of CFOs said that the Bank’s performance in providing an appropriate level of monetary stimulus to the economy was ‘good’ or ‘very good’; 84% gave a “good” or “very good” rating to the Bank’s performance in maintaining an appropriate exchange rate for sterling. While inflation has run above its target for over three years, 65% of CFOs rated the Bank’s record on controlling inflation as “very good” or “good”.
CFOs were most concerned about the Bank’s record on ensuring a flow of credit to the economy. Under half (47%) said that the Bank had performed well in this task.
But looking ahead 70% of CFOs believe that loose monetary policy is likely to lead to inflation running significantly above 2.0% for a prolonged period.
“UK CFOs think the Bank of England under Sir Mervyn King did a good job on controlling inflation and boosting the economy through monetary policy," Ian Stewart, Chief Economist at Deloitte, said.
“But this survey testifies to the challenges facing the new Bank Governor, Mark Carney, as he takes over at this week’s Monetary Policy Committee meeting.
“A majority of the UK’s largest businesses rate the Bank’s performance on getting credit to the economy as inadequate or worse, and a clear majority do not believe that the Bank will be to meet its mandate and keep inflation below its 2.0% target.”
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