East Midlands Chamber hopes interest rate cuts could be coming this spring or summer after the Bank of England decided to maintain UK rates at 5.25% as part of its ongoing commitment to curb inflation.
Rates have been steadily rising since a low of 0.1% in 2020 and have been set at the current rate since last August.
Six members of the nine-strong Bank of England Monetary Policy Committee voted to keep rates at their current level, with two voting for an increase and one to decrease. Bank Governor Andrew Bailey was among those voting to keep the rate where it was.
Commenting on the decision, Scott Knowles, Chamber Chief Executive, said: “The start of 2024 has again thrown up new challenges for business. Problems in the Middle East, disruption to shipping routes in the Red Sea, and the continuing War in Ukraine all present pressures on global supply-chains, which impacts us here in the East Midlands.
“However, disregarding a slight blip in December, recent months have shown that inflation is gradually moving towards the Bank’s long-term economic target of 2%, with further encouraging figures earlier this week from the British Retail Consortium showing annual shop price inflation to have eased to 2.9% in January, down from 4.3% in December.
“We know from our own surveys that around four in ten SMEs say they are directly negatively impacted by the current rate through higher borrowing costs, with smaller firms in sectors such as hospitality and retail being disproportionately impacted. While a decision has been taken today to keep interest rates on hold, we would encourage the Bank to look at reductions throughout the remainder of the year to support those businesses looking to invest and grow their productivity.
“In the meantime, East Midlands Chamber remains ready to help local business grow and prosper and ensure the reality of doing business in the East Midlands can inform future decisions by the Bank and policy makers.”