BCC: Interest rates must stay low despite stubborn inflation
17 Aug 2010
Commenting on the July inflation figures, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“Headline CPI inflation fell slightly in July, which was in line with expectations, but it remains stubbornly high. Nevertheless, it would be wrong to overreact to these figures by raising interest rates or withdrawing the support provided by quantitative easing. While the Monetary Policy Committee cannot ignore the risk that inflationary expectations might worsen, there is no sign of this happening at present.
“With earnings growth remaining below inflation, these figures signal a further squeeze on disposable incomes. This will inevitably dampen demand and reinforce the pressures that will build up as a result of the Government’s deficit-reduction programme. If the MPC was to consider tightening monetary policy in these circumstances, risks of an economic setback would increase. Against this background, we urge the MPC to persevere with the current expansionary approach. The balance of probabilities still suggests that inflation will fall sharply over the next year.”
LATEST NEWS
07 Feb 2012
One year after the start of an innovative new project, the resulting energy efficiency savings to Suffolk businesses, and a cleaner environment, are stacking up.
07 Feb 2012
The creative team at Ipswich-based marketing and PR agency, White Space Design, have been taken back to school quite literally for two exciting new design projects.