BUSINESS leaders in Yorkshire have welcomed a decision to keep interest rates on hold – amid fears that the UK has a long way to go on the road to recovery.
The Bank of England’s monetary policy committee voted to peg the base lending rate at 0.5%.
The decision comes amid encouraging economic signs – with an improvement in manufacturing output and the FTSE 100 index of leading company shares breaching the 5,000 level for the first time in almost a year.
Steven Leigh, senior policy adviser for the Lockwood-based Mid Yorkshire Chamber of Commerce, said: “Holding the rate was a wise decision.
“For businesses, low rates are a good thing. The less you have to pay to service debt the better and the more likely we are to get out of recession.”
Mr Leigh said the Bank of England’s policy of “quantitive easing” – pumping £175bn of money into the economic system – risked stoking up inflation.
He said: “The Bank doesn’t want to put interest rates up now only to find it has to reduce them again later because inflation is running at 5% or 6%.
“On balance, given the present situation, the Bank reached the right decision.”
Jonathan Shipton, assistant regional director of employers’ group the CBI said: “It is not surprising that the Bank has chosen to keep things as they are, given the big decision on quantitive easing taken last month.”
Alan Hall, Yorkshire regional director for manufacturers’ group the EEF, said: “All the signs are that economic recovery is going to be long and gradual.
“Current talk of an end to recessionary conditions is premature and the combination of low interest rates and economic stimuli must be kept in place for some time to come to underpin a far stronger recovery.”