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MPC holds firm on QE stance
by Sarah Miloudi on Dec 19, 2012 at 10:18
The Bank of England will not embark on any further asset purchases this year as December’s monetary policy committee (MPC) meeting showed members remained 'in wait and see mode'.
As many expected, the latest MPC minutes showed the vote to leave policy on hold was almost unanimous, with eight rate setters agreeing to hold off on further QE and just one, David Miles (pictured), in favour of a £25 billion expansion in the programme.
MPC members could also hold firm on this stance next year, some economists believe, and pointed to the committee’s comments hinting more QE is not around the corner.
'It noted risks from the euro area seemed less pressing and inflation was likely to remain above its target over the next year or so,' Capital Economics said, but also argued it may not take much to tip the balance back in favour of more QE.
Capital explained: 'It noted business surveys were consistent with flat output in the near-term and reiterated its expectation inflation would fall back to target in the medium-term.
'It said the government’s decision to use the transfer of cash from the QE fund to reduce the issuance of treasury bills might imply less of a monetary easing than had gilt issuance instead been cut. Indeed, if we are right in expecting the economy to disappoint the MPC’s expectations, and eurozone tensions to re-emerge, then more QE is not too far off.'
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