Reacting to the Bank of England’s latest interest rate decision, David Bharier, Head of Research at the British Chambers of Commerce, said:

“Today’s decision was widely expected, and it’s clear the Bank of England is taking a cautious approach before making a much-anticipated rate cut.

“Yesterday’s data showing CPI inflation on target was encouraging. However, service sector inflation and average earnings growth remain relatively high – two metrics the Bank will be focused on. In line with the easing inflation rate, our latest forecast expects the Bank to cut the interest rate to 4.75% by the end of the year.

“Rate cuts, when they come, will provide welcome breathing space for the companies we represent across the UK. Our research shows that while business concern about the cost of borrowing has been easing it remains at historically high levels. Many firms have told us they have been put off from investing due to high borrowing costs, and this has no doubt been a drag on overall economic growth.

“A rate cut will help encourage businesses to invest, but policymakers need to look at a much broader range of measures to support long-term growth. “Our election manifesto calls for immediate action by the next government on a green industrial strategy, better skills planning, business rate reform, improved relations with the EU, and support for SMEs to embrace AI.”