Old Lady holds fire on policy as QE continues

 
Ben Southwood
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THE BANK of England’s rate-setting committee decided yesterday to hold off on new policy measures in October, with the Bank making the last of the £50bn purchases announced in July over the month.

Analysts across the board had described the decision as a “non-event”, expecting, correctly, that the Bank would “sit on its hands”, and announce no new policy until the November meeting or later.

Dr Ros Altmann, boss of over-50s lobby group Saga and long-time critic of quantitative easing (QE), welcomed the decision to delay any extra intervention.

“I am very pleased the Bank has decided not to create any more money,” Altmann said, “QE is a drastic policy experiment that may be valid for an economic emergency to avoid depression – but we are clearly not in a depression.”

“Indeed, we may be emerging from recession,” Altmann added, “With inflation still above target, the Bank is right to hold off from any more measures.”

Many City economists expected that falling inflation, combined with the UK’s very modest emergence from the recession, would spur action in November, when the current programme of asset purchases is completed.

But top Lloyds Bank macro economist Adam Chester said inflation would stay high, limiting Bank policy options. “It now looks doubtful that headline inflation will fall below the government’s two per cent target by the end of the year, or through 2013,” Chester warned.