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Base rate and QE decisions unanimous

Base rate and QE decisions unanimous

Category: Economy

Updated: 19/02/2010
First Published: 17/02/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The decisions to freeze the base rate of interest at 0.5 per cent and not to expand the programme of quantitative easing (QE) were made unanimously.

In its meeting at the beginning of the month, the Bank of England's Monetary Policy Committee (MPC) noted that an argument could be made for increasing the stimulus and that some members felt the arguments for and against were very finely balanced.

However, the minutes of the meeting revealed that there was a fear that a further injection of funds could see an increase in inflation.

The MPC said inflation was likely to remain above the target of two per cent for some months, and would be 'significantly' above the target in the near term as a result of the fall in value of the pound sterling and the restoration of the 17.5 per cent VAT level.

In the meeting, the MPC said that employment data had remained more resilient than might have been expected, and that retail sales, car registrations and the housing market pointed to a resumption of household spending and recovering confidence.

Economic activity was adjudged to be recovering, but only weakly, however, and the economic outlook was found to have changed little over the past few months.

The MPC warned that credit conditions would remain tight for some time and 'the medium-term headwinds to economic activity remained considerable.'

The MPC's next announcement on the base rate and QE is to take place on 4 March.

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