MPC must maintain expansionary position
31/01/10 | 00:01
Commenting on the choices facing the Monetary Policy Committee (MPC) at its meeting next Thursday, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
"While there is no current need to increase the Quantitative Easing programme above £200bn, it is very important for the MPC to maintain an expansionary position.
“Given the underlying weakness of the economy, emphasised by the recent disappointing GDP figures, it is premature to start reducing the QE stimulus. It is certainly much too early to contemplate any near-term interest rate increases.
“It is worrying that recent comments by MPC members have been interpreted by the markets as an indication that policy is set to change. Like the Fed in the United States, our own MPC must reassure businesses that interest rates will remain very low for an extended period.
“It would be dangerous and unwise to start tightening policy in the belief that the preliminary GDP estimate will be revised upwards. We know that the UK recovery is weak and fragile, so the main policy priority must be to avoid a double-dip recession.”
Ends
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Notes to Editors:
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