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Businesses will ‘appreciate stability where they can get it’ following BoE’s rate hold

20 Dec 2018

bankResponding to the Bank of England’s decision to hold interest rates at 0.75%, Tej Parikh, Senior Economist at the Institute of Directors, said:

“After a chaotic few weeks, businesses will appreciate stability where they can get it.

“The Bank is being faced with mixed signals as it assesses recent economic data. The drop in inflation and oil prices are likely to ease the pressure to raise interest rates, but the pick-up in wages is pulling in the other direction.

“While several members have been tempted by a rate rise on the back of higher pay packets, they should keep in mind that elevated business costs and the persistent productivity challenges are likely to restrain significant salary rises.

“The current political uncertainty is difficult to navigate for both the Bank and firms alike, so the MPC is right to wait for greater clarity before it makes its next move – anything else would be a risky punt on the economy. The Bank now has a key role in communicating how it would support confidence in markets and the economy in the crucial months ahead in all circumstances, including a no-deal.”

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