20/07/11

Commenting on the Monetary Policy Committee (MPC) minutes published today by the Bank of England, David Kern, Chief Economist at the British Chambers of Commerce said:

“The MPC has been split for some time, so it comes as no surprise that the minutes reflect a wide range of views. The short-term pressures on inflation remain strong, but the majority of the committee still believes that inflation will come down towards the target over the medium-term. More significantly there is an understanding that the period of slow growth in the economy may be longer than previously thought. There is also a greater awareness of the potential negative effects of the debt problems in the Eurozone.

“There is now hope that rates will be kept on hold until early 2012. If this proves right, it would be a welcome development. It would be premature and potentially dangerous to raise interest rates while the government is implementing a very tough deficit cutting programme. With wage pressures remaining modest, and with businesses and consumers facing acute pressures, it is right to wait before raising rates. At present, only one member of the committee has voted for increasing the QE programme, but if the economy continues to shows sign of weakness in the next few months, the MPC should consider this option more seriously to avoid a setback.”

Ends

Notes to editors:

The MPC minutes show that the balance of opinion within the committee remains unchanged. Seven members voted to keep rates and the QE programme on hold, two voted for a quarter percent increase in rates, and one supported an increase in QE from £200bn to £250bn.

The British Chambers of Commerce (BCC) is the national voice of local business.

The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce, serving over 100,000 businesses across the UK, which employ over five million people. For more information visit: www.britishchambers.org.uk

Media contacts:

Liz Larvin
Tel: 020 7654 5813 / 07825746812
Email: l.larvin@britishchambers.org.uk

Lisa Morrison
Tel: 020 7654 5812 / 07717682221

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