The Bank of England had decided for the third month running to keep interest rates at 4.5 per cent.
The announcement came as little surprise to analysts who mostly predicted that the Monetary Policy Committee (MPC) would stick by the rate for one month more. But it came to the chagrin of suffering retailers, some of whom have been experiencing the worst sales for years.
Many within the industry wanted the MPC to cut rates to encourage consumer spending. The British Chamber of Commerce (BCC) said it was upset that the MPC was not willing to make “bold moves” to ease “worsening economic conditions”.
“While we appreciate that the MPC faces serious uncertainties, waiting too long before taking corrective action also entails major risks,” said David Frost, director general of the BCC. “The economic situation has worsened considerably, and business confidence is weak.”
“It is therefore critically important that the MPC should maintain a flexible approach, and should stand ready to counter the sharp slowdown in the pace of economic activity,” he added.
The CBI reacted more positively to the news. Ian McCafferty, the body’s chief economic adviser, said: “While conditions remain difficult in the retail and manufacturing sectors, there are some signs of a recovery in the housing market.”
It said that there were “potential risks” such as inflation and growth, which “the Bank must remain alert to”.
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