Cautious Approach on Rates Continues
19 Sep 2024
Published in: British Chambers of Commerce News
The BCC reacts to the Bank of England's latest decision on interest rates.
Reacting to the Bank of England’s decision to hold the interest rate at 5%, David Bharier, Head of Research at the British Chambers of Commerce said:
“Today’s decision by the MPC to hold the interest rate at 5% is as expected and shows the Bank is taking a cautious approach to cutting. This follows the Federal Reserve's bigger than expected 0.5pp cut yesterday, which appears to have boosted investor confidence.
“While inflation has been clearly easing over the last year, yesterday’s ONS data showed some persistent price pressures in core inflation and the services sector, in particular. Our own research has shown that inflation remains a top concern for businesses, but significantly down on the peaks we saw in 2022.
“Many SMEs are looking for a clear path on cutting the interest rate further. Borrowing costs have risen for many of them, particularly those left vulnerable by Covid and Brexit, and this has had a big negative impact on investment intentions. However, with potential further volatility in inflation, the path may be slow and steady. Our own forecast suggests another cut is likely by the end of this year.
“Last month’s rate cut gave businesses who are struggling to invest welcome breathing space. But businesses are now looking to next month’s Budget for further help. Firms understand the fiscal backdrop the Government is facing and the need to address public finances, but that must not be at the expense of investment and growth.”
Black Country Chamber Policy & Impact Officer, Gemma Edwards commented:
“The Bank’s decision to hold the interest rate at 5% was widely expected. Recent ONS data showing that inflation is also holding steady, at slightly above the target rate of 2%, helps explain the cautious approach that the Bank of England is taking, in contrast to the Federal Reserve which cut rates by 0.5% yesterday.
"In the Black Country, we’ll be looking to the Budget in October for signs of how the government will help businesses to continue to have the confidence to invest and grow even if interest rates don’t drop.”
Want to learn more?
Join us at our upcoming Quarter 3 2024 Data Reveal event on 17th October. Be the first to hear how businesses in the Black Country are feeling, as we exclusively reveal Black Country economic data. Gathering data on sales trends, recruitment, cashflow and investment, the QES is the most authoritative national business confidence survey, and this event is one not to be missed.
Hear from our speakers who will be giving their analysis of what the data means for your business, and more on this quarter's theme of staff benefits and wellbeing.
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