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Bank of England gets Cumbria Chamber’s message on interest rates

Sir Jon Cunliffe speaking in Kendal

[C]umbria Chamber of Commerce has urged the Bank of England to think twice before raising interest rates.

The Chamber hosted a lunch in Kendal today addressed by Sir Jon Cunliffe, a Deputy Governor of the Bank and a member of its Monetary Policy Committee, which sets interest rates.

Chamber Chief Executive Rob Johnston said: “Most commentators expect the Monetary Policy Committee to raise interest rates when it meets next month.

“We asked Sir Jon to exercise caution. We don’t think a rate rise is necessary because inflation is falling. It could damage businesses that are already struggling to cope with rising costs by increasing the cost borrowing.

“We were pushing at an open door. He got that message.”

The Bank’s base rate has been at or below 0.5% consistently since March 2009. This allows businesses, consumers and homebuyers to borrow cheaply but has hit returns for savers.

In his speech, Sir Jon cautioned against raising rates too fast and hinted that an August rate rise was not a done deal.

He said the UK economy was taking a long time to heal after the financial crisis and made the case for what he called “stodginess” – a reluctance to raise rates too quickly.

He does, however, expect the base rate to rise to 1.25% over the next two years, in line with the Bank’s May forecast. This should allow it to hit the Government’s inflation target of 2%.

More than 40 business people attended the lunch at the Castle Green Hotel. They were able to talk directly to Sir Jon and take part in a question and answer session.

Rob added: “We’re delighted that Sir Jon made time in his busy schedule to come to Cumbria.

“It’s an important part of our role at the Chamber to bring key influencers to Cumbria so they can meet businesses here and understand the challenges and opportunities we face. He did that, he got the message. It was a very productive meeting.”

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