Economists believe Bank should resist more QE

Julian Harris
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THE BANK of England is today expected to leave its monetary stance unaltered – a policy that would be supported, broadly, by City A.M.’s own shadow monetary policy committee (SMPC).

The UK has avoided a triple dip recession, with the economy growing by a better than expected 0.3 per cent during the first three months of the year.

Some economists have even cast doubt over whether the UK experienced a double dip, arguing that revisions to official figures may show that there were not two or more consecutive quarters of decline at the start of last year.

Output in recent years remains subdued, however, with the euro area crisis weighing on the UK’s hopes of recovery.

While six of our SMPC believe the Bank should hold off on more easing, three want more stimulus.

“There is a strong case to do more. Austerity will bite again this year,” said Berenberg’s Robert Wood, arguing for £50bn more asset purchases.

Capital’s Vicky Redwood agrees: “Given the uncertainty about the impact of the asset purchases, it makes sense to do another £50bn,” she said.