By Daniel Hunter
The Bank of England's Monetary Policy Committee began a two day meeting today, and despite recent data suggesting the economy is returning to a degree of growth, there are calls for further quantitate easing (QE).
“The Bank of England’s two day meeting began today (Wednesday), and the market is expecting another ‘bazooka’ of quantitative easing," Jeremy Cook, chief economist at foreign exchange company, World First, said.
"The amount that analysts are expecting has dipped from £75bn to £50bn in the past few days, as a result of the good UK PMI numbers we’ve seen in January.
“All these surveys are now showing growth in January and the services number was the highest since March 2010. However, this has not altered our belief that the MPC will vote for a bigger hit of £75bn worth of QE to boost the economy.
“This second round of QE has never really been about the UK. Rather, it has been about insulating the UK economy from the fallout from the Eurozone, whilst keeping the pound weak to help our beleaguered manufacturing base.
“Now, while a Lehman Brothers type event has been averted courtesy of the ECB’s new lending operation, recession and diminished confidence cannot be spirited away and herein lies the problem. The European recession will have a less deep but a more protracted effect on the UK’s economy, and that’s why a £75bn hit should be approved.”
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