Interest rate decision prolongs uncertainty for firms, warns BCC

22 Mar 2024

The Bank of England's decision to hold interest rates at 5.25% prolongs the period of uncertainty for firms, warns the British Chambers of Commerce (BCC).

The Bank's Monetary Policy Committee (MPC) voted by eight to one to hold the base rate at 5.25%, the fifth month in a row that it has stayed at that level.

The Bank said that the recent falls in the rate of inflation were 'encouraging' but that it needs to be certain that inflation will fall to its 2% target and stay there before making cuts to rates.

David Bharier, Head of Research at the BCC, said the decision to hold rates was widely expected.

He added: 'However, it prolongs the period of uncertainty for firms grappling with high borrowing costs.

'While [the] inflation data showed a further easing, most small businesses know that the economy remains fragile. The interest rate is itself a driver of inflation, as housing, rental, and borrowing costs continue to rise.

'Our most recent forecast expects some cuts to the base rate going forward, potentially falling to 4.5% by the end of the year. But in the meantime, businesses need reassurance from policymakers that there is a clear plan to drive much needed economic growth.'

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