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CITY AM SHADOW MPC

<!--StartFragment--> <strong>ALLISTER HEATH CITY A.M.<br /></strong>Growth is returning slowly to the UK economy. But the Bank will increase quantitative easing this month; it has little choice really as the markets (and the Treasury) are not ready to face any exit strategy.<br /><br /><strong>SIMON WARD HENDERSON NEW STAR<br /></strong>Expand gilt purchases by &pound;25bn but halve the pace to &pound;12.5bn a month. Quantitative easing is starting to work: broad liquidity has risen by nine per cent annualised so far in 2009.<br /><br /><strong>HOWARD ARCHER IHS GLOBAL INSIGHT<br /></strong>&ldquo;Hold rates and expand QE by another &pound;25bn. While the economy is past the worst, major obstacles remain to sustainable recovery and there are still serious concerns about bank lending.&rdquo;<br /><br /><strong>GEORGE BUCKLEY DEUTSCHE BANK<br /></strong>&ldquo;Interest rates may need to be kept very low for some time.&nbsp;Given uncertainties about policy effectiveness and some mixed economic news, we recommend a further &pound;25bn of asset purchases.&rdquo;<br /><br /><strong>GRAEME LEACH INSTITUTE OF DIRECTORS<br /></strong>&ldquo;The transmission mechanism for QE remains uncertain but as yet broad money shows only a weak response. This will change so there is no immediate pressure to expand QE but it's a close call.&rdquo;<br /><br /><strong>VICKY REDWOOD CAPITAL ECONOMICS<br /></strong>&ldquo;The limited success of QE suggests that the MPC should use the remaining &pound;25bn sanctioned by the chancellor, and ask permission to do more if, as looks likely, that is necessary.&rdquo;<br /><br /><strong>MICHAEL SAUNDERS CITIGROUP<br /></strong>The MPC may well vote for a tactical extension to QE in July, while seeking authorisation from the chancellor to raise QE above &pound;150bn. I expect them to announce in August QE is being suspended.<br /><br /><strong>CHARLES DUMAS LOMBARD STREET RESEARCH<br /></strong>Keep interest rates unchanged but we need more QE from the Monetary Policy Committee. The current fears of inflation are groundless within a practical timeframe.<br /><br /><strong>TREVOR WILLIAMS LLOYDS TSB<br /></strong>&ldquo;The bank rate should stay at 0.5 per cent and the Bank of England should pursue QE, asking for more than the &pound;150bn already allocated as a sustainable recovery is not yet in clear view.&rdquo; <!--EndFragment-->