Premature interest rates increases could derail the recovery
Commentating on today’s interest rate decision announced by the Bank of England, John Longworth, Director General of the British Chambers of Commerce, said:
“The MPC has shown composure and sound judgement in keeping rates unchanged.
“It would have been imprudent to push through a rate rise at this moment when our economic recovery remains in need of care and encouragement. Rates will eventually have to rise and when they do it should be done slowly and steadily. Until that moment, the Bank of England is right to keep interest rates at current levels.”
David Kern, Chief Economist at the British Chambers of Commerce, said:
“Those who advocate higher interest rates, underestimate the fragility of the economic recovery, especially in the face of a highly uncertain international backdrop.
“The MPC will be watching increases in earnings closely. But any adverse inflationary pressures will be mitigated by the declines in oil and commodity prices and by the strength of sterling seen over recent months. Our view remains that inflation will remain below the 2% target until well into 2016. That being the case, the MPC should keep interest rates at current levels for the foreseeable future and, in doing so, it will not take any undue risks.”