MPC moots revival of QE programme
BANK OF ENGLAND policymakers considered extending the £200bn quantitative easing (QE) programme this month after weaker data pointed to a deteriorating economic outlook.
At the monetary policy meeting held on 7 and 8 July, the minutes revealed that the committee considered “arguments in favour of a modest easing in the stance of monetary policy”.
“A further modest monetary stimulus would act to offset the softening in demand
prospects and make it more likely that the inflation target would be met in the medium term,” the minutes said.
But with inflation likely to remain above target for some months, the committee chose to keep policy on hold.
Simon Hayes at Barclays Capital said that if growth is more disappointing than the MPC expects, the committee “may find itself grappling more actively with the dilemma of whether it can print more money without jeopardising the credibility of the inflation-targeting framework”.
Once again, the minutes showed that Andrew Sentance was the lone dissenting hawk this month. As expected, he again voted for an increase in interest rates of 0.25 per cent but has yet failed to convince other members to join him.