22 February 2012, 18:05  Bank of England lifts the asset purchase programme by GBP 50 billion

Bank of England's Monetary Policy Committee (MPC) decided to lift the asset purchase programme by GBP 50 billion in February through a split vote as two members called for larger stimulus, the minutes of the meeting showed Wednesday. Governor Mervyn King and six other policymakers voted to raise the size of quantitative easing (QE) by GBP 50 billion to a total GBP 325 billion, while David Miles and Adam Posen sought a GBP 75 billion increase. Members assessed that a positive note from domestic and international economies pointing to a better-than-expected growth in the near term suggest that an increase of GBP 50 billion would represent a material monetary stimulus. Further, a slight reduction in the immediate downside risks from the euro area due to the European Central Bank's long term loan offering supported the assessment. The MPC discussed a case for larger stimulus, but a majority of policymakers observed that it was not clear that a larger stimulus was warranted at the current juncture. "A larger increase risked sending a signal that the Committee thought the economic situation was weaker than it was," the minutes said. The minutes suggests that the door remains open for more QE should the economy struggle for sustained growth over the coming month, said IHS Global Insight Chief U.K. Economist Howard Archer. He believes that additional QE is more likely than not.

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