Coventry business leaders urge Bank to hold rates

BUSINESS leaders in Coventry and Warwickshire have urged the Bank of England to retain interest rates at 0.5% when the Monetary Policy Committee meets tomorrow.

Economists are split on what the MPC is likely to do as inflationary pressure mounts, increasing the likelihood that rates will have to rise in order to keep finances in check.

However, the Coventry and Warwickshire Chamber of Commerce said any move to raise rates in the current climate would have a damaging effect on businesses struggling to recover from recession, especially in light of the disappointing pre-Christmas growth figures.

Louise Bennett, chief executive of the chamber said: “There is conflicting data that the Bank must weigh up but we feel it would be too soon for rates to start to go up.
 
“Business confidence is extremely fragile and the GDP figures for the final quarter of 2010 were very disappointing.
 
“The Bank does the have to balance the economic recovery with its requirement to try to get inflation down. That said, many of the factors causing inflationary pressure – such as rising fuel and food prices – would not necessarily be affected by a rate rise anyway.”

Rates have been frozen at 0.5% since March 2009.

Professor David Bailey, of Coventry Business School, has warned that if rates do go up then while the move would strengthen Sterling, it would also make British goods more expensive to companies abroad and could therefore damage any export-led recovery.