The Bank of England decided yesterday against pumping the British economy up with more new cash and voted to hold its key interest rate at a record-low level of 0.50% after the country emerged from recession.
“The Bank of England’s Monetary Policy Committee today voted to maintain the official bank rate paid on commercial bank reserves at 0.5%,” it said.
The BoE added that its quantitative easing (QE) cash stimulus programme would remain at £375bn ($604bn, €467bn).
Minutes of the latest regular monthly meeting, to be published on November 21, will provide the reasoning behind Thursday’s decisions.
The BoE had been expected to maintain its monetary policy stance after recent data showed the British economy bounced back from a double-dip recession in the third quarter of 2012, helped by the London Olympics.
The BoE had cut its key lending rate to the current record low level in March 2009, when it also launched its radical QE policy to pump up the British economy with hundreds of billions of pounds. The bank raised QE by £50bn to £375bn in July in a fresh attempt to stimulate lending by retail banks and help prevent economic contagion from the debt crisis in the neighbouring eurozone.
And more money-printing is still on the cards, with analysts polled by Reuters forecasting another £50bn dose ($80bn) in the first quarter of 2013 to support the nascent recovery.
“We are pretty sure that the economy will need more stimulus in the months ahead,” said Vicky Redwood at Capital Economics. “And we do not think that the committee is out of firepower yet. In any case, conceding that there is nothing more it can do would hardly help confidence.”
Several MPC members have voiced doubts about the continued effectiveness of its asset-buying programme in boosting the economy.