Chamber expert looks ahead to Interest Rate decision

Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce

Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce, has given his views ahead of this week's Monetary Policy Committee meeting.

He said: "It is unlikely that we will see any change in either the interest rate or the current level of asset purchases this month and that would be the right course of action at this time. Sterling’s current weaker position against the dollar and Euro will put further pressure from inflation on consumers in the months ahead, so I expect that the Bank will hold off further asset purchases for the time being.

"Whilst the banking system also remains constrained we are unlikely to see any move in interest rates to control inflation, as this would put pressure on demand and consumption, leading to possible loan defaults. Defaults by businesses and consumers would in turn make the situation worse for the UK banking sector and tighten further the credit conditions for businesses. Unfortunately we find ourselves in a flat economic environment where traditional monetary policy levers are somewhat ineffective and it is to government that we must look to pull the levers that will drive growth."