Bank of England keeps policy on hold, "wait and see" prevails
Thu 06 Sep 2012
LONDON (SHARECAST) - The Bank of England (BoE) has decided to keep the Bank rate unchanged at 0.5% and the size of its asset purchase program at 375bn pounds; both as forecast.
The Monetary Policy Committee (MPC) has added that it expects the announced programme of asset purchases to take another two months to complete and that the scale of the programme will be kept under review.
Commenting on the decision economists at Barclays Research are saying that: “We think it likely that today’s decision mimicked last month’s in having been unanimous. However, beneath this surface accord there are bubbling disagreements across the committee. Some members are concerned that policy has already become too expansionary, and are supporting the current stance through gritted teeth. Others seem poised to sanction further loosening once the current asset purchase programme has been implemented.
“The median voter is probably in a “wait and see” mindset: there is little expectation of policy action ahead of the November meeting and so no pressing need to come to a conclusive decision on whether the current policy setting is appropriate. Even so, there has been scant encouraging news about the economic outlook recently, and given the MPC’s predilection to provide “too much” support rather than “too little”, a further policy easing in November seems likely.”