The consensus is that interest rates will be held at 0.5 per cent, where they have been since March 2009, but while some economists think that the QE programme will remain at £325bn, others predict that a further £50bn will be released in response to the worsening economic outlook highlighted by poor PMI figures on Friday.
Last month’s minutes from the MPC meeting revealed that several members were close to voting for more QE. An extract from the minutes said that the decision not to expand the QE at this meeting was “finely balanced” for several members and that “there was a case for injecting further monetary stimulus”.
Howard Archer, Chief UK & European Economist at IHS Global said: “On balance, we lean towards the view that the Bank of England will hold fire on more Quantitative Easing at its June meeting, but we certainly would not rule it out.
“Much could depend on the May purchasing managers’ survey for the dominant services sector. And even if the Bank of England does hold off from more QE next Thursday, it is looking ever more likely that it will go back down that road before long,” he added.
And Michael Saunders of Citi commented: “We continue to expect that worsening economic prospects will prompt the MPC to expand QE markedly further – to a total of about £500bn – and that the next instalment will occur soon. On balance, we forecast the MPC will expand QE by another £50bn at the June meeting."
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