Bank of England should go “further and faster” on interest rates, says IPPR

Reacting to today’s decision by the Bank of England’s Monetary Policy Committee Carsten Jung, head of macroeconomics at IPPR, said:

"Given low inflation and slow growth, the Bank of England should have cut rates by more. A further and faster rate cut is needed to support economic recovery.

“The Bank of England confirmed that the new government's budget will likely improve economic growth. We think it is unlikely to put much upward pressure on inflation, consistent with recent evidence from the US. This should encourage the Bank of England to be bolder in reducing interest rates.

“Separately, the Treasury transfers about £20 billion annually for quantitative easing losses at the Bank of England—funds that could cover half of last week's increase in the public services spending. The UK is an international outlier in this practice, which should be reconsidered."