February 12 2014.

Commenting on the Bank of England’s Quarterly Inflation Report, David Kern, Chief Economist at the British Chambers of Commerce (BCC) said:

“Governor Carney and the MPC are right to evolve the forward guidance policy. Now that the emphasis has shifted towards a wide range of economic indicators, including spare capacity, it should help avoid a situation whereby unexpected shifts in any one indicator would immediately trigger expectations of an imminent interest rate rise. The success or failure of the policy will be whether or not it reinforces business confidence.

“We think that the Bank’s new forecasts are over-optimistic, but this shouldn’t affect business confidence in the MPC’s determination to maintain low interest rates. However, we share the MPC’s belief that the recovery has the potential to continue, and attention now turns to the Chancellor’s Budget where we hope to see measures announced that help businesses continue to create jobs and drive the recovery.”

* The pound has risen by over a penny against the euro at lunchtime today to 1.2165.