Commenting on the Monetary Policy Committee’s decision to keep interest rates at 5%, Grahame Smith, STUC General Secretary said:
“With inflationary pressures easing and forecasts of recession being presented on almost a daily basis, this was the time for the Committee to take a lead and cut rates.
“Plummeting confidence is exacerbating the impact of the credit crunch and commodity prices. A cut would have provided a limited boost to those who currently fear for their jobs and their homes.
“For most of its decade long existence, global economic developments have provided the MPC with a fair wind in meeting its inflation target. Sustaining the NICE times was not particularly difficult with globalisation depressing wages and providing cheap imports.
“If the MPC fails its first major test, then a fundamental reappraisal of its membership, role and remit will be required. A dual mandate on inflation and employment, similar to the US Federal Reserve, would provide greater flexibility in a downturn.”
