Rate-setters could decide on further money printing bout

Ben Southwood
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BANK of England policymakers may decide to boost their quantitative easing (QE) scheme by £25bn in their March meeting, analysts predicted yesterday.

The market commentators said that Mervyn King’s surprise decision to vote in the minority for extra asset purchases in their last meeting left the door open to extra monetary easing.

“The outcome of the March meeting of the Bank’s Monetary Policy Committee (MPC) looks to be balanced on a knife edge,” said IHS Global Insight’s Howard Archer. “There is a very real possibility that the MPC could go for another £25bn of QE, which would take the stock up to £400bn.”

But he also stressed that the Bank was striving to use other programmes, including the Funding for Lending Scheme, to revive the struggling UK economy.

City A.M.’s shadow MPC came down firmly on the side of the hawks, with just two voting for extra money printing in March, although Capital Economics’ Vicky Redwood endorsed Paul Tucker’s suggestion that the Bank start charging other banks money – instead of paying them interest – to keep reserves there.