Commenting on today’s interest rate decision and Inflation Report from the Bank of England, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:
On the interest rate decision:
“Given the stronger than expected GDP figures for Q3, it is not a surprise that the Bank has kept interest rates on hold. However, if the economy weakens in the coming quarters, a further cut to the base rate would be a real possibility.
“Monetary policy is close to the limits of its effectiveness. The government now needs to use this month’s Autumn Statement to help businesses continue to invest, grow and recruit during this period of heightened uncertainty.”
On the Inflation Report, Suren Thiru added:
“It is little surprise that the Bank of England has upgraded its UK growth forecasts for 2016 and 2017 compared to their August report, but the central bank remains more pessimistic over the outlook for the economy than before the referendum.
“Significantly, the new forecasts suggest that rising prices are likely to become an increasing impediment to the UK’s growth prospects, as imported inflation erodes consumer spending power and squeezes profit margins.
“The Bank of England is likely to face a tricky, near-term balancing act between supporting a slowing economy and managing a sustained period of rising inflation.”