Interest rates hold is a balanced and sensible decision – Chamber

The decision taken by the Bank of England (BoE) to continue holding interest rates at 3.75 per cent was welcomed by Greater Birmingham Business leaders in the wake of geopolitical uncertainty.

Eight members of the Bank’s nine-person Monetary Policy Committee (MPC) voted to hold interest rates steady, while one member opted for a hike to 4 per cent.

The announcement follows the rise of inflation to 3.3 per cent, with ongoing energy and supply pressures estimated to increase in the months ahead.

Emily Stubbs (pictured), head of policy at Greater Birmingham Chambers of Commerce, said: “Holding interest rates at 3.75 per cent was a balanced and sensible decision in the face of continued geopolitical uncertainty and renewed pressure on global energy markets.

“The Bank of England is right to recognise that today’s inflationary risks are largely being driven by external shocks that monetary policy cannot resolve.

“This is a very different moment to the 2022 energy crisis. Then, higher interest rates were used as a blunt but necessary tool in an overheating economy.

“Today, with growth weakening and demand under pressure, pulling the same lever risks doing more harm than good - increasing borrowing costs, suppressing investment and exacerbating job losses.

“Businesses need clarity and direction from government. The King’s Speech must set out a clear plan to support firms through high energy and operating costs, while unlocking long‑term growth through greater investment, productivity and export support. Without that step‑change, confidence will remain fragile.”

Greater Birmingham businesses are being encouraged to have their say on how events in the Middle East are affecting their operations through a survey.