In its latest monthly UK Economic Outlook, the Institute of Directors (IoD) says there is no case for raising interest rates this year.
Raising interest rates now, when broad money supply growth is so weak, would be unprecedented, says the IoD.
Gerry Jones, chairman of the IoD in the South West, said: “There’s much discussion about the need for a Plan B in fiscal policy. We think the opposite.
“The biggest threat to the economy comes from near zero growth in the money supply.
“Let’s not make the mistake of viewing money as irrelevant to the economic outlook. In the wake of the financial crisis it is central.”
The IoD says that at no time in the past 25 years have interest rates been raised when the broad money supply wasn’t experiencing double digit growth. It believes doing so now, when the broad money supply is flat at best, risks a double-dip recession.