British Chambers of Commerce speaks out on recent Monetary Policy Committee (MPC) decision. 

David Kern, BCC Economic Adviser said:

"We regret the decision to keep interest rates unchanged at 5.75%, as the immediate priority of the MPC must be to limit the risk of a major downturn. Whilst the markets and many analysts have anticipated the decision, following the preliminary figures showing stronger than expected GDP growth in Q3 2007, there was a strong case for a cut in rates. 

“The worsening threats to the international banking system heighten the danger of a sharp global downturn. Given the subdued domestic inflationary pressures, a cut in rates today would not have posed serious risks. 

“Annual CPI inflation fell below the 2% target in recent months, and was below the levels predicted in the August Quarterly Inflation Report. UK GDP growth was strong in Q3, but it is clear that growth is set to weaken from now on more sharply than was envisaged the August Quarterly Inflation Report. 

“Credit conditions have become tighter since August, both globally and in the UK. The dangers to the economy have worsened and businesses require easier credit conditions without undue delay, to avoid a nasty reversal. We urge the MPC to announce a small interest rate cut in December.”