The British Chambers of Commerce, representing hundreds of Kent firms, has backed the Bank of England’s decision to keep interest rate on hold and not to “print” any more money.
The Bank’s Monetary Policy Committee kept rates on hold at the historic low of 0.5%. The base rate has remained unchanged for more than four years.
It also decided against pumping more money into the economy through the Quantitative Easing (QE) - or Asset Purchase - programme which already stands at £375 billion and has been blamed for hammering savings and pensions.
David Kern, the BCC’s chief economist, said: “We support the prudent decision to maintain QE at £375bn, and hold interest rates at 0.5%. Following the return to positive GDP growth in Q1, pressures for an increase in QE have eased. We still firmly believe that adding to QE would only provide marginal benefits for the economy, while increasing the risks of higher inflation and bubbles in the future.”
But Mr Kern expressed concern that a call by three members, including the Governor - of the nine member MPC have voted for an extra £25bn of QE at the past few meetings. More QE “could be part of a wider policy shift where higher inflation and a weaker pound are tolerable.” He called on incoming governor Mark Carney, who will shortly replace Sir Mervyn King, to make better use of the existing QE programme, and use measures other than QE alone to support a revival of business lending.