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Unanimous decision to keep QE status quo

Unanimous decision to keep QE status quo

Category: Economy

Updated: 23/11/2011
First Published: 23/11/2011

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Policy makers at the Bank of England voted unanimously to leave interest rates and quantitative easing (QE) unchanged in November.

According to the minutes of the Monetary Policy Committee meeting earlier this month, all nine members agreed further economic stimulus should not be sanctioned at present.

This meant the base rate of interest remained at its record low of 0.5% for the 33rd consecutive month, while the programme of QE was maintained at £275 billion.

Having decided to inject another £75 billion into the economy through quantitative easing in September, it had been widely anticipated that no further action would be taken.

Although the committee admitted to having growing concerns over how the economic recovery is progressing, particularly given the problems in the eurozone, it appears likely to sit and wait to see what effect September's injection of money will have.

However, the minutes revealed that opinion is split over whether further QE is likely to be necessary once the current programme of purchases is completed in February.

"Some members noted 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," said the minutes.

"Some other members judged that the risks to inflation around the target were more balanced."

With regards to the base rate of interest, many experts are currently predicting it will remain at 0.5% throughout next year.

While thousands of mortgage borrowers on deals tracking the Bank of England base rate will remain content that their repayments look set to stay low, savers will not be happy.

Low interest rates mean the returns paid on savings accounts continue to disappoint, particularly given the current high rate of inflation.

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