View the article online at http://citywire.co.uk/money/article/a649969
Bank holds rates firm but choked economy still in line for QE boost
The Bank of England has held its policy firm but economists are expecting more stimulus - or even a shift toward more radical measures - as growth stalls.
The Bank of England has held interest rates at 0.5%, but more stimulus remains a possibility.
The monetary policy committee had widely been expected to hold policy firm, however economists are mooting the possibility of additional quantitative easing (QE) as well as a shift toward more radical options.
Pointing to recent data hinting at underlying weakness, a contraction in the fourth quarter growth rate looks increasingly likely, they said.
Inflation is also set to stay above the Bank's 2% target, while the eurozone is still struggling to overcome its difficulties.
'If we are right in expecting the economic stagnation to persist throughout this year, and tensions in the eurozone to re-emerge before long, then growth concerns are once again likely to trump near-term inflation worries,' Capital Economics' Vicky Redwood said, arguing the scene was being set for more QE, probably in Spring.
'We still think more asset purchases are likely before long. Even if the committee were to pause in February, more QE in May would then be our best guess, and that is unlikely to be the end of it,' she added.
The Citywire guide to investment trusts
In association with Aberdeen Asset Management
More about this:
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add email@example.com to your safe senders list so we don't get junked.
by Gavin Lumsden on Mar 07, 2014 at 18:53