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Bank of England keeps base rate and QE on hold

Tahmina Mannan
Written By:
Tahmina Mannan
Posted:
Updated:
06/09/2012

The Bank of England has decided to keep the base rate unchanged at 0.5% for the 42nd month in a row, as the economy shows a slight improvement.

The Monetary Policy Committee (MPC) also kept quantitative easing at £375bn and added that it expects the announced programme of asset purchases to take another two months to complete with the scale of the programme remaining under review.

Commenting on the decision, economists at Barclays Research said: “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.”