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Praise for loan rate freeze

10 June 2005

Economists have praised the Bank of England for stabilising the British economy.

It comes after Thursday's decision by the Bank's Monetary Policy Committee to keep rates on hold for the tenth month in a row.

According to the Trades Union Congress the MPC has "called it pretty well" in their decisions since last August to maintain an even keel at 4.75 per cent.

However, economists are insistent that the MPC must react quickly if the UK economy continues its slowdown.

"By and large, I have no criticism of what the MPC has done, but I hope they will react quickly to events," the BCC's economic adviser, David Kern told the Scotsman.

"If the evidence of a slowdown becomes more pronounced, I think they should cut rates."

By keeping rates unchanged for the almost the last year, the Bank has achieved the slowdown in house prices and consumer spending it was hoping for.

But he the chief economist at the TUC Ian Brinkley believes a rate cut is now needed to stimulate growth.

"Looking forward, we now need to be a bit more worried about growth and jobs.

"We've had the slowdown in consumer spending, but it's worrying that we've not seen the pick-up in exports and investment that was supposed to take up the slack."