MPC must cut interest rates by a full one per cent on Thursday
30/11/08 | 00:01
Commenting on the choices facing the MPC at its December 2008 meeting next Thursday, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“Following the disappointing reaction to the PBR it is critical for the MPC to persevere with aggressive interest rate cuts. To alleviate the worse consequences of the recession, we urge the MPC to cut rates by a full one per cent on Thursday, to two per cent. Additional cuts will be needed in the early months of the New Year, probably to one per cent.
“As UK interest rates fall to very low levels, the Bank of England will have to consider using unconventional methods. The main priority remains unblocking the paralysis in the banking sector, which prevents resumption in normal bank lending. To achieve this aim, the authorities will have to focus on using quantitative techniques.
“This means directly targeting the quantity of money, through large-scale purchases of securities. The Fed's massive $800bn package, announced earlier this week, provides useful lessons for other central banks.”
Ends
Media Contacts:
Fiona Cunningham
Tel: 020 7654 5812
Email: f.cunningham@britishchambers.org.uk
OR
Sam Turvey
Tel: 020 7654 5813
Email: s.turvey@britishchambers.org.uk
Notes to Editors:
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 business across the UK, which employ over five million people.