Interest Rate Reaction
Commenting on today’s decision by the Bank of England’s Monetary Policy Committee to raise the Bank Rate from 0.25% to 0.5%, Christian Spence, Head of Research and Policy at Greater Manchester Chamber of Commerce said:
“Today’s rise, the first in ten years, was not unexpected. The Committee hinted strongly in its previous meeting that a rise was likely this time. Whilst the increase is, as expected, small, and its effects on the economy overall will be small, it sends a strong reminder to consumers and businesses that interest rates can indeed increase.
“Whilst spreads on commercial and personal loans remain low, there will be little direct negative impact from this move, but it may cause some to reconsider the likely forward path of rates over the coming years. With the UK economy slowing over the past year to growth of 1.5%, a rise may feel unusual, particularly when in our judgement inflation will rise little further from its current level.
“This move is not without its risks, particularly with the current levels of uncertainty in the UK economy for both domestic reasons and with the ongoing Brexit negotiations. We reiterate our call to government to move rapidly to provide certainty to UK businesses across the country of their proposed policies for the coming years, and they must use the November budget to support business growth and confidence for the future.”