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BCC: cut interest on bank's deposits
The Bank of England should cut the interest rate paid on bank's deposits to 0% to encourage them to lend money to businesses and individuals, according to the British Chamber of Commerce (BCC).
The Bank announced today that interest rates have been held to the historic low of 0.5% for the sixth month in succession.
Despite several major high street banks returning to profit recently recent data revealed that lending to businesses fell by a record £8.4bn in July.
"Persistent weakness in lending to businesses, particularly to small firms, poses serious risks to the early signs of economic recovery," said David Kern, chief economist at the BCC.
"As a temporary measure, the MPC should consider cutting the interest rate paid on deposits kept by commercial banks at the Bank of England, and in some circumstances make this rate negative. This might discourage hoarding of cash and encourage the banks to lend more."
Post Date: September 10th, 2009
The Bank announced today that interest rates have been held to the historic low of 0.5% for the sixth month in succession.
Despite several major high street banks returning to profit recently recent data revealed that lending to businesses fell by a record £8.4bn in July.
"Persistent weakness in lending to businesses, particularly to small firms, poses serious risks to the early signs of economic recovery," said David Kern, chief economist at the BCC.
"As a temporary measure, the MPC should consider cutting the interest rate paid on deposits kept by commercial banks at the Bank of England, and in some circumstances make this rate negative. This might discourage hoarding of cash and encourage the banks to lend more."
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Post Date: September 10th, 2009
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