Interest rate and QE programme left unchanged

In its first meeting under the leadership of new governor Mark Carney, the Bank of England's Monetary Policy Committee (MPC) has voted to keep the base rate of interest at 0.5 per cent and the quantitative easing programme at £375 billion.

David Kern, the chief economist at the British Chambers of Commerce, agreed with the MPC's decision but argued that the Bank could be doing more to boost business lending. He said:

"However, the existing QE programme can and should be used in more innovative ways. We urge Dr Carney and the Committee to focus on measures that will boost lending to businesses. Rather than just gilts, the MPC should consider purchasing private sector assets, such as securitised SME loans. This would make banks less risk-averse in lending to growing businesses who are finding it difficult to access finance."

Steven Gifford, director of economics at the Confederation of British Industry, was unsurprised by the decision. He said:

"Looking ahead, some form of forward guidance on interest rates remains a strong possibility. Although the MPC's scepticism will be hard to dispel, recent financial market volatility and today's statement by the Bank have strengthened the case for providing greater clarity around monetary policy, which businesses would welcome."