By Marcus Leach
The Bank of England's Monetary Policy Committee (MPC) unsurprisingly kept interest rates at 0.5% for the thirtieth straight month, and opted against quantitive easing for now.
Ever since they were cut to 0.5% in March 2009 the rates have remained frozen, with no apparent sign of an increase in the coming months.
The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion, which means for now there will be no quantitive easing, despite calls from the Institute of Directors for just that.
"The downside economic risks are sufficiently great to warrant an extension in quantitative easing now, in order to avoid the risk of a double-dip recession," Graeme Leach, Chief Economist at the Institute of Directors had said.
Economist Jeremy Cook believes that, despite rates being held, there will have been more pressure from the 'doves' on the Committee, unlike last time when the voting was unanimous.
“I think the minutes of this meeting will show that the doves on the MPC will have really tried to convince the others that an aggressive expansion of QE is necessary given the slowdown seen in the wider global economy," Jeremy Cook from foreign exchange brokers, World First, said:
"Only Adam Posen voted for more asset purchases last month and I expect 2 members will have joined him this month.
“The main argument against will have been the inflation picture in the UK and as such we maintain the view that the Bank of England will sit on its hands until the BOE meeting in November during which it will have the Quarterly Inflation Report to consult.”
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