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Bank members united over rates and QE

Bank members united over rates and QE

Category: Economy

Updated: 21/12/2011
First Published: 21/12/2011

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Members of the Bank of England's rate setting committee voted unanimously to keep interest rates on hold earlier this month.

All nine members of the Monetary Policy Committee also agreed not to enlarge the programme of quantitative easing (QE), minutes from the Bank of England show.

The group meets at the beginning of each month to discuss the state of the UK economy and to make a decision on interest rates.

The Bank rate has been on hold since March 2009, while the QE initiative was recently increased by another £75 billion, taking it to £275 billion so far.

Minutes showed that some members of the MPC felt that another enlargement of the QE programme might soon be necessary.

"Some members continued to note that the balance of risks to inflation in the November Inflation Report projections meant that a further expansion of the asset purchase programme might well become warranted in due course," it said.

Another injection of funds into the economy could come early next year, and the British Chambers of Commerce said it would support such a move.

"Given the risks facing the economy in the near future, with minimal growth set to continue and unemployment likely to increase, the MPC should expand QE by a further £50bn early in 2012," said David Kern, chief economist of the body.

"Increasing QE would help to sustain demand in the economy, and keep the exchange rate at a competitive level.

"However, the impact of more QE would be enhanced significantly if the Government swiftly implements the credit easing programme, improving the flow of lending to viable businesses."

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