Responding to the Bank of England’s decision to hold interest rates at 0.75%, Tej Parikh, Chief Economist at the Institute of Directors, said:

“With limited visibility, the Bank of England is right to err on the side of caution today by holding interest rates steady.

“As it stands, the MPC still needs further clarity on the nature of Brexit and the effectiveness of the new Government’s preparations before wading into what are now critical changes in monetary policy. Though the recent decline in sterling could lead to higher inflation down the line, right now uncertainty and hiccups in global growth are pinching economic activity and elevating the risk of a downturn.

“All eyes will be on the MPC’s September meeting. If a disorderly exit from the EU is on the cards, the Bank must not shy away from lowering interest rates in advance to support businesses and households through the turbulence. Waiting until after the fact could lower the impact of any action taken.”