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BCC: Lower inflation reinforces case for MPC to maintain expansionary approach

Commenting on the February inflation figures released today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:

“Although CPI inflation is at 3%, the fall in February was bigger than expected, and the underlying trend is likely to be downwards over the next few months.

“These figures, coupled with low private sector wage increases, should enable the MPC to maintain an expansionary policy approach without worrying that inflation will accelerate in the near future.

“The economy remains weak, businesses are still facing serious pressures, and it would be wrong for the MPC to contemplate early interest rate rises. If in the Budget, the Chancellor presents a more credible plan for reducing the unsustainable deficit, it will be easier for the MPC to persevere with lower interest rates, making a business-led recovery possible.”