Status quo maintained as interest rates remain unchanged

AS Widely predicted, the Bank of England’s Monetary Policy Committee (MPC) has decided to keep interest rates unchanged at 0.5% and to take no further action on quantitative easing.

In the Budget Chancellor George Osborne tweaked the MPC’s mandate saying it would now be able to consider more than just inflation when setting interest rates.

But many economists do not expect more stimulus until Mark Carney – currently Canada’s central bank chief – becomes governor of the Bank of England in July.

British manufacturing shrank for a second successive month in March, according to the latest purchasing managers’ index, although the British Chambers of Commerce expects the UK to avoid a triple dip recession when first quarter GDP figures are released at the end of the month.

Last month the Prime Minister warned of the “unthinkable damage” a sharp rise in interest rates would bring to the UK economy.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “The record low rate of 0.5% needs to be maintained but it’s vital that SMEs start to benefit so they can invest in growing their businesses.

“We hear from companies all the time who want to grow but can’t access the finance to do so. If we want the economy to grow, it’s vital that they can get to the funds needed to support their own business expansion.

“The British Chambers of Commerce has pushed very hard for the establishment of a business bank and it’s vital that this happens sooner rather than later and that it can provide the much needed finance our businesses need.”