MPC should not increase QE in November, says BCC

17th October 2012

Commenting on the MPC minutes published today by the Bank of England, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said: "As expected, the decision to maintain QE at £375bn and hold interest rates at 0.

5% was taken unanimously. But the existing QE programme will be fully implemented before the next meeting, and most commentators expect a further increase to be announced in November. Although domestic stagnation and the global slowdown have lead some to call for further QE, we believe an increase at present would be risky. "The minutes show a wide range of views, but we hope that the MPC opts not to expand the programme further. The strong job figures, and the prospect that inflation may increase next month, strengthen the arguments against an early increase. With yields on gilts at very low levels already, more QE would only provide marginal benefits for the real economy, while creating longer-term risks of bubbles, financial distortions, and higher inflation. "To boost growth, the MPC and the government should do more to support a revival in business lending, both by using the existing QE programme more efficiently, and by using tools other than QE alone. If the MPC agrees to purchase private assets other than gilts, such as securitised SME loans, banks would be less risk-averse in lending to businesses. The Funding for Lending scheme must be implemented more effectively, and the government's promise to establish a fully-fledged British Business Bank must become a reality on the ground.

You might also be interested in

Business Key To Government Spending Plans

Tue 11th February 2025

The BCC is urging Government to help firms grow as it considers its future spending plans.

South Yorkshire Businesses Asked To Share Their Views On The Planning System

Mon 10th February 2025

Businesses across South Yorkshire are being asked to share their experiences with the local planning systems

Rate Cut Eases Some Pressure Points

Fri 7th February 2025

David Bharier, Head of Research at the British Chambers of Commerce reacts to the latest interest rate decision

Sheffield Chamber of Commerce and Industry holds 2025 AGM

Fri 7th February 2025

Sheffield Chamber of Commerce and Industry (SCCI) hosted its 167th Annual General Meeting (AGM) today, welcoming members for an afternoon of connection, celebration and insight.