MPC prepares for more QE

THE Monetary Policy Committee moved a step closer to starting a fresh round of quantitative easing this month, according to the minutes of its latest meeting.

The minutes show the Bank of England’s rate-setting committee voted unanimously to maintain interest rates at their current level with only one member, Adam Posen, calling for an increase in the quantitative easing programme.

However, “most members” were said to have taken the view that the decision over whether to expand QE had been “finely balanced” at the September meeting with “some members” believing if conditions remained the same that would be enough to justify such a move.

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Senior stockbroker David Scott said: “There were no real surprises in this announcement as the MPC are clearly worried about the slowing UK and global economy.

“More QE looks inevitable and with a possible Greek default round the corner they also know that the timing of this will be very important, as they run out of policy options.”

While CPI inflation remains stubbornly above target growing concern about the strength of the recovery has turned the committee’s attention from interest rate rises to economic stimulus.

David Kern, chief economist at the British Chambers of Commerce, said: “Although the voting at the September meeting was unchanged, the minutes suggest that the committee is gearing itself up to increase the quantitative easing programme in the next few months.

“Business will see this as a welcome development. Although inflation remains a serious problem, the most immediate risks relate to weaker growth and the turmoil in the eurozone that may affect the banking system.”