City A.M. shadow MPC votes 8-1 against more QE

ALLISTER HEATH | CITY A.M.
“The economy would not benefit from more QE or loosening of whatever kind. Given the strong services PMI announced yesterday, the MPC needs to publicly sit on its hands while focusing privately on devising an exit strategy. The costs of the present monetary policy are now greater than its benefits. Let us hope Carney has a solution.”

GRAEME LEACH | INSTITUTE OF DIRECTORS
“The committee should take no action to change either rates or QE at the current time. The British economy is strengthening but it still remains too early at this point to call for tighter monetary policy.”

GEORGE BUCKLEY | DEUTSCHE BANK
“No change to rates or QE. The recovery is gaining traction, at least that’s what this week’s surveys suggest. While there is no guarantee that the recovery will prove durable, for the time being it suggests no need for further policy easing.”

VICKY REDWOOD | CAPITAL ECONOMICS
“Keep rates on hold, but do £25bn of QE and get ready to introduce forward guidance. The recovery is gaining momentum, but needs help to become entrenched. There’s plenty of scope for stronger growth without generating inflation.”

ROBERT WOOD | BERENBERG BANK
“No change. The economy is picking up as super-loose monetary policy boosts the housing market and consumer spending. The case for more QE is diminishing. For expectations, I would introduce Fed-style interest rate guidance in August.”

SIMON WARD | HENDERSON
“Hold, but signal that a reduction in stimulus may be warranted if trends are sustained. The economy is picking up, and price pressures may follow. Lower lending rates and the transfer of QE income have loosened monetary conditions further.”

VICKY PRYCE | EX-GOVERNMENT ADVISER
“Hold rates, but keep extra QE under review. Better export, manufacturing, service, construction and mortgage activity is positive but world growth forecasts have been downgraded and the Fed’s intention of stopping QE is unsettling markets.”

TREVOR WILLIAMS | LLOYDS BANK
“Hold rates and no change to QE. UK data suggest a quicker pace of recovery in the last quarter, with the third getting off to a good start. That said, it is early days and revisions suggest that the UK downturn was deeper than though.”

ROSS WALKER | RBS
“I don’t advocate any changes to QE or interest rates at this meeting. There is no compelling case for further asset purchases through QE, especially given the recent improvement in survey data and the stickiness of inflation.”