MPC resists QE call

THE Monetary Policy Committee resisted the temptation to pump more money into the economy today.

The decision not to embark on a fresh round of quantitative easing cames just hours after new data on the services sector was more upbeat than expected.

International Monetary Fund head Christine Lagarde’s suggestion that the Bank of England’s base rate could be cut its their historic low of 0.5% also went unheeded by the MPC.

However, with no imminent end in sight to the eurozone crisis experts expect QE to return to the MPC’s agenda in the coming months.

Coverage of the MPC’s decisions is brought to readers of TheBusinessDesk.com in association with stockbrokers Redmayne-Bentley.

Lauren Charnley, from Redmayne-Bentley, said: “The UK’s Monetary Policy Committee has chosen to keep interest rates at their historic low after the economy was seen to be in deeper recession than was thought at the last meeting. Quantitative easing will not be expanded further than the current £325bn stimulus in place.

“The announcement came as no surprise with most analysts predicting that UK interest rates will remain as they are for the next 18 months to two years.”

The services purchasing managers index remained unchanged in May at 53.3 when a slowdown in output was expected.

The construction PMI, published yesterday, showed that output grew in May but at a slower pace.