Member Article

MPC vote for no further quantitative easing

The Bank of England’s Monetary Policy Committee has decided to maintain interest rates at 0.5%, and keep current levels of quantitative easing.

Interest rates have been at a record low since March 2009, and there was some debate as to whether QE should be extended.

Claire Higgins, head of research at BNP Paribas Real Estate, commented: “November has long been vaunted as the month in which the MPC would elect to launch an additional round of QE. Yet today it was another month of no change, with both QE and the base rate held in place.

“To date, £375 billion has been invested in the asset purchase programme, with the most recent increase of £50 billion taking place in July. The minutes of the October meeting showed that, although the committee was unanimous for the third consecutive month that no further QE was needed yet, there was some debate among members as to whether it should be extended once they had considered their forecasts for November’s Inflation Report.

“It’s been a mixed picture since then. The survey data has been weak, indicating a gloomier outlook for GDP growth in Q4, while the employment figures have continued their merry trend of going in the opposite direction to everything else and being positive.”

Anna Leach, CBI Head of Economic Analysis, said: “It is likely that some recent positive economic data and deepening scepticism within the MPC about the effectiveness of further gilt purchases, has tipped the balance in favour of keeping policy on hold this month.

“Though we expect a modest pick-up in economic momentum through 2013, further QE remains on the table should conditions deteriorate, particularly if ongoing risks in the global economy remain unresolved.”

This was posted in Bdaily's Members' News section by Tom Keighley .