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BCC: 'Keep up the good work MPC'

Published On 8 May 2007 at 08:53:16

Ahead of this week's interest decision, the British Chamber of Commerce (BCC) has praised what the Monetary Policy Committee (MPC) has achieved in the last decade.

The Bank of England was given independence in 1997 and the BCC said that its work since then has helped small and medium-sized enterprises (SMEs) achieve consistent growth over the period.

"British business regards the MPC's first decade as a major success, and we congratulate the MPC for helping to deliver a period of uninterrupted growth and low inflation," explained David Kern, the BCC's economic adviser.

"Our members need economic stability and low inflation, and we have consistently supported the MPC's efforts, even if we do not always agree with every single decision they make."

However, Mr Kern said that the current economic climate meant that the MPC could face "difficult times" in the future. Indeed, it is widely expected that rising inflation will force the committee to increase interest rates when it meets.

"There is a clear danger that natural concern over recent developments would produce an over-reaction, and would result in damaging monetary overkill," Mr Kern added.

"At this stage, calls in some quarters for a 50 basis points early increase in Bank Rate, to 5.75 per cent, are misguided and potentially dangerous."

Recently, some economists predicted that interest rates would have to increase to seven, or even 7.5 per cent, to curb inflationary pressure.

 

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