We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message
RSS FeedGovernance

BoE holds fire on quantitative easing

March benchmark interest rate maintained at 0.5% as expected

Article comments

The Bank of England's (BoE) Monetary Policy Committee has said it would maintain the stock of asset purchases financed by the issuance of central bank reserves, known as quantitative easing (QE), at £375 billion.

In its decision announced on Thursday, the Committee also voted to maintain the UK’s benchmark interest rate at 0.5 percent, a level it has been at since March 2009. City economists' response to the decision suggested that further QE action is all but imminent.

James Knightley, economist at ING, said, "We were in the camp expecting an extra £25 billion of QE on the basis that since three members, including Governor Mervyn King, voted for an extra £25 billion of QE in February, there wasn't a particularly high hurdle for more action."

"We think the BoE took the view that they didn't need to add to pound sterling's woes by printing more money this month. In any case, UK bond yields have fallen back despite the ratings downgrade while equity markets remain buoyant. We still look for more stimulus given the weak demand story in the UK, but it is more likely to come in May when the BoE release new forecasts," he added.

Howard Archer, chief UK economist at IHS Global Insight, said, "BoE's decision to hold off from stimulus action was the likely the result of a tightly split vote and we strongly suspect that the MPC will act in the second quarter and very possibly as soon as April."

Archer said improved February surveys for the dominant services sector and retail sales may have done just enough to have stopped the BoE from acting in March, particularly as support for the economy is coming from sterling’s marked decline.  

"However, we suspect that it is more a question of what further action will the BoE take to try and help the economy, rather than will they act," told CFO World.

In a statement, Stephen Gifford, the director of economics at the CBI, said, "A combination of mixed economic data and the BoE's recent tilt in a more dovish direction is likely to have made this decision a close call. With only a modest pick-up in growth expected, the possibility of further QE will remain a live issue."

The minutes of Thursday's meeting will be published on 20 March.


Recommended Articles


BoE holds fire on quantitative easing

What’s going to kill your company?

What’s going to kill your company?

The role of the CFO and the board in strategic risk governancemore ..

Tesco’s new finance chief starts two months early amid accounting crisis

Marks and Spencer releases Alan Stewart early by to help deal with £250 million hole in Tesco’s accountsmore ..

Microsoft removes Bing image widget after Getty lawsuit

The company is being sued by Getty Images for copyright infringementmore ..

Apple loses bid for sales ban in Samsung patent case

Apple failed to show that it suffered enough harm as a result of Samsung's infringementmore ..

What makes a good board report?

Examining how CFOs can improve the way they report back to the boardmore ..

Examining the issue of corporate litigation funding

Litigation funding is a very useful tool for CFOs but not a panacea for all legal mattersmore ..

Send to a friend

Email this article to a friend or colleague:

PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.

In Depth
Can finance rise to the challenge of major transformation?

Can finance rise to the challenge of major transformation?

Outdated finance processes, systems and competencies leave too many questions unanswered more ..

In Depth
Interim CFO or consultant? The pros and cons

Interim CFO or consultant? The pros and cons

Ed Harding offers an insight into the life of an interim CFO and the advantages in driving transformation more ..


* *