BoE ready to pump more money into economy if needed
FRESH money will be pumped into the economy if the outlook deterioriates further, the minutes from the Bank of England’s May policy meeting indicated yesterday.
At the meeting, all nine members of the Monetary Policy Committee (MPC) voted in favour of extending the central bank’s quantitative easing programme by £50bn, taking the total to £125bn. However, the minutes show that some members argued for a larger stimulus of £75bn.
“As the precise amount that would ultimately be required was so uncertain, there was no pressing need for the larger extension at this meeting,” the minutes said.
City economists yesterday took the Committee’s conclusion that “the risks of stimulating demand too little at the current time seemed greater than the risks of stimulating it too much,” as a sign of further stimulus to come.
“The tone of the minutes suggests that the Committee is considering the need for further purchases above and beyond May’s additional £25bn,” said Investec economist Philip Shaw.
Business leaders yesterday pressed for additions to the programme as well.
“We urge the MPC to vigorously persevere with its asset purchase programme, and to consider accelerating and even increasing the scale of quantitative easing,” said David Kern, chief economist at the British Chambers of Commerce.
The Committee also voted unanimously to keep interest rates at a record low of 0.5 per cent.