The Bank of England has held interest rates at 5.25% and the governor Andrew Bailey has suggested that cuts are unlikely.
Bailey said there “is still some way to go” as policymakers continue to attempt to bring inflation down further, the bank’s policy is to remain “restrictive for an extended period of time.”
The Bank’s Monetary Policy Committee (MPC) voted in favour of holding the base rate which is at a 15-year high.
On Thursday, six members of the MPC voted in favour of holding the base rate at 5.25%, but three members wanted to raise interest rates to 5.5%.
Bailey said, “We’ve come a long way this year, and successive rate increases have helped bring inflation down from over 10% in January to 4.6% in October, but there is still some way to go.
“We’ll continue to watch the data closely, and take the decisions necessary to get inflation all the way back to 2%.”
Federation of Small Businesses (FSB) Chair Martin McTague said, “A third hold in a row was widely expected, but yesterday’s worse than expected GDP result has to be setting alarm bells ringing among economists and policymakers.
“The MPC needs to be responsive to indications that economic damage is setting in, and should consider moving the timetable for rate cuts up.
“Small firms are often interest rate bellwethers, as a result of their own index-linked borrowing, and also as the businesses that are most affected by downturns in consumer spending prompted by higher rates.
“With the lending environment for small firms having become far less hospitable, they are increasingly less able to get the funding they need to invest for the future – or even to keep going.
“Adding to the difficulties many would-be borrowers face is the issue of personal guarantees being demanded by banks for relatively small sums. That is why we have sent a super-complaint to the Financial Conduct Authority to ask it to investigate, and to consider expanding its regulatory perimeter to cover more small business loans.”