Interest rates held amid growing cost pressures – Chamber

UK interest rates have been held at 4.75 per cent following a divided vote among Bank of England policymakers yesterday.

And business leaders say the Monetary Policy Committee’s decision was “practically inevitable” following the rise in inflation announced earlier this week.

However, the MPC’s decision was not unanimous, with six members preferring to keep the base rate at 4.75 per cent while three voted for a 0.25 percentage point cut.

The MPC had previously cut the level in August and November.

Yesterday’s announcement followed new official data on Wednesday showing the rate of Consumer Prices Index (CPI) inflation rose to 2.6 per cent last month, its highest level since March and the second monthly increase.

Emily Stubbs (pictured), head of policy at Greater Birmingham Chambers of Commerce, said: “The Bank of England’s decision to hold interest rates on Thursday was practically inevitable given the labour market and inflation data we saw released this week.

“Many city analysts expect monetary policy to loosen earlier in the new year.

“However, the Monetary Policy Committee will no doubt keeping a close eye on core inflation and how businesses are likely to respond to the additional cost pressures they will face as a result of the announcements made in the Budget.

“Cost pressures remain ingrained for many firms across Greater Birmingham and the onus is on the Government to come up with a strategy that will help businesses reduce the overheads they face related to recruitment, energy bills and wider costs associated with international trade.”