Businesses welcome Bank’s decision to keep interest rates at 0.5%

Business leaders have reacted well to the Bank of England's decision to keep interest rates at a historic low of 0.5%.

It was widely expected the rates would remain the same, and this was confirmed by the Bank of England in an announcement yesterday. Richard Boot, Chairman of the Institute of Directors, said that ‘in the absence of clear evidence of recovery, the Monetary Policy Committee is absolutely right to keep interest rates unchanged'.

Although interest rates have been kept at the same level, some businesses have expressed their disappointment that there has been no extension to the bank's programme of Quantitative Easing (QE).

Under Quantitative Easing, the central bank purchases financial assets such as Government and corporate bonds using money that it has created in order to stimulate the economy. So far £150 billion has been allocated to the programme, but some business leaders feel this will not be enough to support an economic recovery.

Katie Teasdale, Senior Policy Adviser for the Birmingham Chamber of Commerce, commented:

"We believe there is a strong argument for a further increase to at least £200 billion. An extension of Quantitative Easing combined with other measures such as the MPC purchasing company debt will serve to boost business lending. This is crucial if we're to finally see those elusive green shoots."

11/09/09