Business leaders from across the region have called on the Bank of England not to tighten monetary policy when it meets this week.
After a disappointing 0.1 per cent economic growth in the final quarter of 2009, Paul Bassi called for the Bank’s Monetary Policy Committee (MPC) to maintain the status quo foreseeable future.
Mr Bassi, who is president of Birmingham Chamber of Commerce and Industry (BCI), said that last week’s GDP figures emphasised the fragility of the economy.
He said: “We expect interest rates to be kept at 0.5 per cent. We are still hearing of massive job losses and redundancies. While it is encouraging that manufacturing activity has this month hit a 15-year high, it is essential that this is sustained.
“We are not calling for MPC to extend quantitative easing at this stage but it should certainly not remove the stimulus which is in place.”
Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said the low growth figures for the final quarter of 2009 highlighted that the economic recovery from an 18-month recession would be slow and warned against reacting to the recent jump in inflation.
She believes, therefore, that interest rates should remain at their all-time low figure when the Monetary Policy Committee meets.
Ms Bennett said: “As soon as there is any rise in inflation, some become twitchy about interest rates and call for an immediate rise.
“We do not believe that would be good for business or good for the economy as whole. You have to look at the factors that have led to the rise in inflation and whether it is a blip or a trend before acting.
“An interest rate rise this month would come too soon and could be potentially damaging. The Bank’s decision on it quantitative easing programme is less clear-cut, however, but there is a wide belief that they will stick at £200 billion.”