Tucker: Bank to hold fire on withdrawing stimulus

DEPUTY governor of the Bank of England Paul Tucker said yesterday that the central bank is unlikely to start withdrawing support from the UK economy in the near future, given the uncertain nature of the recovery.

Tucker said the recovery would be “bumpy and uneven” because of “reasonably strong” headwinds, despite a strong rebound from an 18-month recession at the start of this year.

“Earlier in the year, I had expected – half expected perhaps – that by this time in the year the Bank of England would start to withdraw the monetary stimulus we had provided to the economy,” Tucker told delegates at the CBI conference.

“That seems to me…rather less likely now than it was then.”

The BoE has slashed interest rates to a record low of 0.5 per cent and spent £200bn of newly created cash on buying assets to boost growth.

One member of the MPC has called for higher interest rates to counter inflationary pressures, while another wants an expansion of the central bank’s asset purchase scheme to support the recovery.