BCC: MPC must maintain expansionary approach given continuing threats to economy

Commenting on yesterday’s Monetary Policy Committee (MPC) decision, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:

"We expected no changes to either interest rates or Quantitative Easing this month. With the £200 billion QE programme now complete, we support the MPC’s decision not to make changes at this stage, but it should consider new techniques aimed at improving the effectiveness of the programme.

“Signs of worsening international confidence in the UK are worrying, but it would be wrong to contemplate raising interest rates or scaling back the QE programme at present. Despite the upward revision to GDP in the fourth quarter of last year, the economy remains weak and fragile. Businesses are still under serious pressure and there is no room for complacency.

"Given the dangers still facing the economy, it is important for the MPC to persevere with an expansionary approach. Threats of a double-dip recession are unquestionably more serious in the near future than risks of higher inflation."