GUS WILLIAMS, CEO of Chambers Wales South East, South West and Mid, said: “Today’s 5-4 decision to hold interest rates at 4% was a close call, but ultimately the Bank of England decided against making a move.
“More interesting was Governor Bailey’s press conference, which was a ‘shrug of the shoulders’ admission that no one is really sure where the economy is or where it’s heading.
“Bailey sounded like he wanted to keep his powder dry in the face of potential AI, private equity and shadow banking bubbles blowing up.
“Lowering interest rates, although it might spur some increase in activity, does not really solve the underlying issues and imbalances that are driving economic stagnation across developed economies.
“There might be a greater risk that reducing interest rates would just exacerbate some of these imbalances.
“An unquestioning belief in the ability of monetary policy to regulate the economy over the past 30 years, especially when Bernanke was its global cheerleader, carries a lot of the blame for where we’ve ended up, so the Bank of England taking a back seat for now is probably the right call.
“Fiscal, not monetary policy is the key issue, hence all eyes are on the upcoming budget.”
