Downside risks force Bank to hold QE at £375bn

The Bank of England’s monetary policy committee has voted against re-starting its multi-billion pound stimulus programme.

Despite fears over a 'triple dip', the Bank’s monetary policy committee (MPC) voted against an extension to quantitative easing (QE), after the last of the £375 billion of asset purchases was spent in November.

The nine man panel, which meets monthly on Threadneedle Street, also held interest rates at their record low of 0.5%, as expected.

The bank did however announce that it would re-invest £6.6 billion of gilts that would mature in March, while it took the unusual step of issuing a statement to accompany the decision to keep monetary policy unchanged. 'The risks are weighted to the downside, not least because of the challenges facing the euro area,' the MPC said.

ING economist James Knightley said there was little chance of a change to the Bank of England's stance in the short term as the global economy slowly improves.

He said: 'While the UK contracted in 4Q12, recent data flow has suggested that the UK will narrowly avoid a third official recession in the space of five years'.

Carney, who replaces Mervyn King as governor in July, was still being questioned by MPs on  the Treasury Committee when the Bank of England policy decision was announced at midday.