LONDON (Reuters) - The Bank of England Monetary Policy Committee voted to leave interest rates at a record low of 0.5 percent on Thursday and said it will increase the size of its quantitative easing programme by 50 billion pounds to 125 billion.
Following are reactions from business groups and economists:
DAVID KERN, ECONOMIC ADVISER, BRITISH CHAMBERS OF COMMERCE
“The markets anticipated the MPC’s decision to keep interest rates unchanged. However, the recession remains severe and business is concerned that the quantitative strategy has not been effective so far.
“Yields on gilts and corporate bonds are still too high, and the growth of money held by industrial and commercial companies is too weak.
“It is important that the MPC acts vigorously to remedy these shortfalls.
“Inflation is a long-term risk and the MPC needs to present a convincing exit strategy. But, alleviating the recession must be the immediate priority and this means the MPC must execute the quantitative policy more forcefully.”
“Given the degree of stimulus that has been imparted to the economy, it is not surprising that recent data have shown a brighter tone.
“But while the economy may have started to pull out of its steep dive, there is a long way to go before this turns into a fully-fledged recovery.
“For the rest of this year, it’s less a case of upward momentum, more a slowing of the downward momentum. And even when the economy returns to positive growth, the upturn will be weak and gradual.
“Quantitative easing is still in its very early stages, and we saw a positive response immediately after the Bank began investing in gilts. For it to be fully effective, it should support money supply growth and broader lending, as well as boost liquidity.
“It will be some time before we have hard evidence of whether it is having the desired effects, but more businesses are telling us they see some of the credit freeze starting to thaw, and fewer of them report that conditions are getting worse.”