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Rate hold is hailed.

BUSINESS groups have welcomed the Bank of England's decision to keep interest rates on hold.

Yesterday the Bank's Monetary Policy Committee voted to keep the base rate at 0.5% for a record 25th successive month.

The MPC also decided not to pump any more money into its pounds 200bn quantitative easing (QE) programme, introduced in 2009 to free up credit markets by boosting money supply.

The North East Chamber of Commerce praised the interest rate decision, claiming the economy was not yet strong enough to withstand a hike in borrowing costs.

NECC president Martyn Pellew said: "Businesses are reporting that their two most pressing concerns in the coming months are inflation and interest rates.

"We are still not seeing confidence stretching to significant new investment decisions or employment growth, so the MPC must remain mindful that these upbeat signs are still fragile."

The CBI said the decision to hold rates was unsurprising.

Liz Mayes, assistant regional director, CBI North East, said: "There are conflicting messages about the low level of consumer confidence versus brighter prospects for certain sectors, which continue to cloud the issue.

"No doubt the MPC is waiting for further signs that the recovery is back on track before changing its stance."

Meanwhile the Institute of Directors said maintaining economic growth was more important than keeping inflation in check.

Alastair Thomson, IoD North-east regional chairman, said: "Right now it's not the time to be throttling off the growth we have started to see.

"Inflation is an issue but wages remain pretty low and the Bank doesn't have that much control over commodity prices."

The Bank's decision comes as the European Central Bank hiked interest rates for the first time in nearly three years yesterday.

The ECB increased its base rate to 1.25% from a record low of 1% - its first rise since July 2008 - to combat the effects of inflation.


CONFLICTING MESSAGES: Liz Mayes, assistant regional director of the CBI
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Title Annotation:Business
Publication:Evening Gazette (Middlesbrough, England)
Date:Apr 8, 2011
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