The best business advice, opinion, news and expertise in Greater Manchester and further afield.

Thursday, 6 August 2009

Chamber reaction to Interest Rates and Quantitative Easing decision

by Ilona Krohn, Principal Economic Advisor

We welcome the MPC's decision to increase quantitative easing (QE) by £50 billion. QE and its efficacy remain a very complex issue. This is new territory for any central bank and its main effect so far seems to have been to bolster the capital base of the banking system.

New lending, particularly to small and medium businesses, remains low and has actually fallen over the last three months. There is also no significant increase of money in the economy.

It is important now that the Bank of England analyses the effects the programme has had so far and to clearly understand its impacts. Then we need a clear and focused plan of action covering the next few months. Clarity and predictability are vital to maintain stability and enable businesses to plan in unprecedented and uncertain circumstances.

No comments:

Post a Comment