Decision To Leave Interest Rates Unchanged Was Right Says Chamber
5th August 2010
The Bank of England has voted to keep interest rates on hold at 0.5% for an 18th month. With the economy still fragile, low interest rates will support the recovery.
Reacting to today's Monetary Policy Committee (MPC) decision, David Kern, Chief Economist at the British Chamber of Commerce, said: "The MPC made the right decision by leaving interest rates and the quantitative easing programme unchanged this month. However, uncertainty over future interest rate policy is damaging confidence. Businesses cannot properly plan for recovery without clear knowledge that rate rises will be off the agenda for an extended period.
"Global risks of an economic setback appear to be worsening, so the welcome news that UK GDP strengthened in the second quarter of 2010 must not lead to complacency. While the eurozone's problems remain unresolved, there are now worrying signs of a slowdown in the US and even in China.
"The tough deficit-reduction measures announced in the Budget, although necessary, will inevitably increase the threat of a UK economic setback. Given the precarious economic background, it is absolutely vital that the MPC maintains the current low level of interest rates until the second quarter of 2011 at the earliest."
Maresa Molloy, Head of Policy and Information at Liverpool Chamber of Commerce commented:"TheQ2 Merseyside Economic Survey showed that many businesses are experiencing cash pressures and we are far from secure as far as recovery is concerned, with public sector cuts yet to make an impact, this is the right decision to encourage growth."
For further information contact:
Pamela Holstein
Press Officer
0151 227 1234 x 2203
M 07725 413485
Pamela.holstein@liverpoolchamber.org.uk
