Interest rate cuts have already gone too far. That was the unanimous view of the Shadow Monetary Policy Committee (SMPC) at its recent quarterly meeting at the Institute of Economic Affairs.

There are widespread calls in the media for interest rate reductions, but SMPC members argued that credit conditions were already too loose. A further reduction would be inappropriate. Some members were particularly worried that a further reduction would fuel inflationary risks in the medium term.

Members also expressed concern about the increasing tax and regulatory burdens in Britain, which risked undoing the supply-side reforms of recent years and had already raised the ‘natural rate’ of unemployment.