Commenting in advance of the MPC decision this week, Adrian Coles, Director-General of the BSA said: "If the Bank of England wishes to make a contribution to a recovery in the housing and mortgage markets, it should not cut interest rates this month. We need to encourage an increase in the flow of funds into the mortgage market, not take steps that would further restrict that flow.
"The Bank should also bear in mind the severe difficulties suffered by many pensioners who now find that a lifetime of saving has not delivered the standard of living they had every right to expect until a few months ago.
"Finally the MPC should heed the point recorded in its own minutes covering its February decision – that ‘there was a great deal of uncertainty about what would happen to banks’ and building societies’ ability and willingness to lend at low levels of interest rates."
Mr Coles said: "The Bank needs to fully assess the impact of the dramatic decisions on interest rates made so far before cutting Base Rate further.
"If the Bank feels further action is now necessary, quantitative easing would be much preferable to a further rate reduction, as it would increase the flow of funds in the economy, and make it easier for deposit-takers to attract funds.”
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