Interest rate reaction: The Bank is still moving too slowly, says IPPR

Reacting to today’s decision by the Bank of England’s Monetary Policy Committee to cut interest rates, Carsten Jung, principal research fellow and head of macroeconomics at IPPR, said:

“The recent economic weakness in the UK is primarily driven by too high interest rates. While many commentators focus on project-by-project discussions that individually have small effects, the elephant in the room is high rates. Today’s rate cut was therefore much needed, but the Bank is still moving too slowly.

“We are in the last mile of returning to normal rates of inflation. While the energy price shock is still rippling through the system, recent measures of underlying inflation show we are back to historical averages. By keeping rates high the Bank has been perhaps understandably cautious, but their current stance looks increasingly zealous.”