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MPC must persevere with forceful quantitative easing despite higher inflation

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

“These figures are closely in line with the Bank of England’s recent forecast that inflation will accelerate sharply in the next few months, possibly reaching 3%, before falling again later next year.

“These temporary fluctuations do not justify a change of policy. Medium-term inflation trends will be driven by the underlying weakness of demand in the economy and ample spare capacity, which still suggests that inflationary pressures are modest overall.

“Given the serious risks facing the UK economy and the dangers of a double-dip recession in 2010, it is important for the MPC to persevere with an aggressive QE programme, and to consider special measures aimed at boosting bank lending to businesses.”