BoE to hold on rates and QE

ECONOMISTS expect the Bank of England&rsquo;s Monetary Policy Committee to hold fast on interest rates and quantitative easing (QE) at its October meeting later this week, as the economy continues to chug slowly back towards health.<br /><br />City experts predict that the Bank will keep interest rates on hold at 0.5 per cent well into next year so as not to stifle the nascent signs of recovery by further squeezing bank lending.<br /><br />The MPC is also expected to refrain from announcing any further extension to the asset purchase programme, after deciding in August to increase QE by a further &pound;50bn to a total of &pound;175bn.<br /><br />But many economists predict that the Bank is still on course for another QE extension at its November meeting, by which time it will have access to the latest quarterly growth and inflation reports. At the August meeting, three MPC members &ndash; Bank governor Mervyn King, David Miles and Tim Besley &ndash; voted to increase QE to &pound;200bn, though they were outnumbered 6-3 by their fellow MPC members.<br /><br />King refrained from voting for an increase to &pound;200bn in September, though the minutes of the meeting revealed that &ldquo;for those members who preferred a larger stimulus at the August meeting, a larger asset programme could still be justified&rdquo;.<br /><br />The MPC&rsquo;s decisions on Thursday&nbsp; will come after the Bank of England last week invited over 40 economists to a summit to discuss QE, introducing an unprecedented level of transparency to its policymaking process.<br /><br />At the meeting, the Bank insisted it had no immediate plans to cut the interest rate paid on commercial banks&rsquo; deposits, despite widespread fears in the City that it would soon put such a plan into place.<br /><br />