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The Bank of England's monetary policy committee's (MPC's) decision to keep interest rates at their previous level of five per cent has been questioned by business leaders.

According to economic analysts the decision was unsurprising as the Bank has to balance the threat of spiralling inflation with a looming recession.

David Kern, economic adviser to the British Chambers of Commerce, explains that while business understands the reasons behind the move, the MPC should be more wary of recession.

He remarks: 'While the near-term rise in inflation is unavoidable, it is also temporary as weaker growth would clearly push down inflation sharply next year. Limiting the threat of a major recession must be the priority.'

Similarly, the British Retail Consortium is calling on the bank not to 'rule out' rate cuts.

This, the body says, is because the UK is facing weakening sales and the MPC should ensure the current slowdown does not lead to a collapse.

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