The Bank of England is leaving the door open to a new year £200bn money expansion programme after revealing that it remains unconvinced about the economy's ability to emerge from the deepest and longest recession on record. Minutes of the December meeting of Threadneedle Street's monetary policy committee indicated that the nine-strong body is adopting a watch-and-wait approach amid concerns that an unrelenting credit crunch and a fresh wave of financial unrest abroad could put paid to Britain's recovery hopes. The MPC said evidence that the economy was on the up after six successive quarters of falling activity were matched by downbeat signs. All nine members of the committee voted to keep borrowing costs on hold at 0.5% and to keep the quantitative easing programme - due to end in February - under review. Sterling fell following publication of the minutes, with many City analysts convinced that interest rates will remain on hold at their lowest ever level.
Minutes of the December meeting of Threadneedle Street's monetary policy committee indicated that the nine-strong body is adopting a watch-and-wait approach amid concerns that an unrelenting credit crunch and a fresh wave of financial unrest abroad could put paid to Britain's recovery hopes.
The MPC said evidence that the economy was on the up after six successive quarters of falling activity were matched by downbeat signs. All nine members of the committee voted to keep borrowing costs on hold at 0.5% and to keep the quantitative easing programme - due to end in February - under review.
Sterling fell following publication of the minutes, with many City analysts convinced that interest rates will remain on hold at their lowest ever level.
Minutes from the Monetary Policy Committee's December meeting show that all nine members elected to leave interest rates at their historic low of 0.5pc and to maintain the Bank's quantitative easing (QE) scheme. Economists said the decision made it increasingly likely that the Bank would begin monetary tightening next year. "[The minutes are] consistent with our view that they will finish QE at the end of January and won't do any more," George Buckley, chief UK economist at Deutsche Bank, said. The Bank is widely expected to begin winding down QE and raising rates by the final quarter of next year.
"[The minutes are] consistent with our view that they will finish QE at the end of January and won't do any more," George Buckley, chief UK economist at Deutsche Bank, said. The Bank is widely expected to begin winding down QE and raising rates by the final quarter of next year.
The prospect of a fresh bout of quantitative easing receded yesterday, after it emerged that the Bank of England's Monetary Policy Committee (MPC) voted unanimously against extending the programme this month. All nine members of the committee, including the Bank's Governor, Mervyn King, pictured, voted to maintain the £200bn asset-buying scheme announced in November, as well as deciding to keep interest rates at 0.5 per cent. While the MPC acknowledged that several setbacks had recently threatened global financial stability - above all the crisis in Dubai - the committee did not believe enough had changed in the past month to extend quantitative easing. The previous month, the MPC was split over how much money to print, with one member, David Miles, calling for an additional £40bn.
All nine members of the committee, including the Bank's Governor, Mervyn King, pictured, voted to maintain the £200bn asset-buying scheme announced in November, as well as deciding to keep interest rates at 0.5 per cent.
While the MPC acknowledged that several setbacks had recently threatened global financial stability - above all the crisis in Dubai - the committee did not believe enough had changed in the past month to extend quantitative easing.
The previous month, the MPC was split over how much money to print, with one member, David Miles, calling for an additional £40bn.
-David Kuo is director at the Motley Fool. The opinions expressed are his own.- If you thought 2009 was as bad as things will get, then think again: 2010 could be worse. It is likely to be a year of enforced austerity with both the government and households making obligatory cuts to their budgets. High on the government's agenda will be reducing the Budget deficit, if the UK is to avoid the embarrassment of having its sovereign debt rating cut by rating agencies. This will have a knock-on effect on households, which could see their disposable incomes slashed by hikes in both direct and indirect taxes. There are two possible ways for the government to reduce the Budget deficit. The first is to increase tax revenues and the second will be to slash expenditure - both of which will have an adverse impact on the economy. There is a third, which is to raise revenue through the sale of state assets. These may include the Royal Mint, the nations stake in part-nationalised banks, and anything else the Chancellor might find lurking at the back of the wardrobe.
If you thought 2009 was as bad as things will get, then think again: 2010 could be worse. It is likely to be a year of enforced austerity with both the government and households making obligatory cuts to their budgets.
High on the government's agenda will be reducing the Budget deficit, if the UK is to avoid the embarrassment of having its sovereign debt rating cut by rating agencies. This will have a knock-on effect on households, which could see their disposable incomes slashed by hikes in both direct and indirect taxes.
There are two possible ways for the government to reduce the Budget deficit. The first is to increase tax revenues and the second will be to slash expenditure - both of which will have an adverse impact on the economy. There is a third, which is to raise revenue through the sale of state assets. These may include the Royal Mint, the nations stake in part-nationalised banks, and anything else the Chancellor might find lurking at the back of the wardrobe.
The first is to increase tax revenues ....which will have an adverse impact on the economy
how blandly this idiocy is slipped into the narrative. It is somehow so obvious that it is unquestioned keep to the Fen Causeway
