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Thursday, 9 December 2010

Interest Rates Held

Commenting on the Bank of England's decision to hold interest rates and maintain the quantitative easing programme at £200 billion, Dr Brian Sloan, Head of Business and Economic Policy at Greater Manchester Chamber of Commerce, said: "This decision came as no surprise. Growth in emerging economies is driving up commodity prices and combined with a weakened Sterling there is inflationary pressure for producers’ raw material prices and imported goods. This is giving rise to arguments in favour of increasing interest rates, however the Bank should resist as this is the last thing distressed businesses and householders need at this time.

"The recovery remains weak a year on from exiting recession, and as a result the economy still has considerable slack to take up an increase in demand in 2011. This will help suppress domestic pressures on inflation, however the over target inflation we are experiencing must not in turn lead to wage inflation, otherwise the Bank’s hand will be forced."

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