Shadow MPC stays 6-3 against increasing QE

CITY A.M’s panel of top economists voted unanimously to hold interest rates at 0.5 per cent, and 6-3 in favour of holding QE.

Three voted for an increase in quantitative easing, with two in favour of a £25bn hike and one proposal of £50bn more asset purchases. The current scheme stands at £375bn.

Most of the panel noted the recent improvement in the British economy, but remained tentative about tightening monetary policy too quickly.

The Bank of England’s monetary policy committee (MPC) will announce their decisions on interest rates and QE today. Governor Sir Mervyn King will chair his last MPC meeting before Mark Carney takes over.

Martin Beck, analyst at Capital Economics, suggested that a change in monetary policy was unlikely to emerge, after several months of a 6-3 split on QE. “We expect the committee to remain in limbo for yet another month, keeping bank rate at 0.5 per cent and the level of QE at £375bn”.