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Bank tipped to pause cash support

The Bank of England is expected to hold back from unleashing extra emergency support for the economy amid mixed signals over the fate of the recovery.

The Bank's Monetary Policy Committee (MPC) is forecast to keep its quantitative easing (QE) stock at £325 billion, after injecting £50 billion in February, while holding interest rates at a record low of 0.5%.

The MPC's April meeting follows a run of positive surveys on the manufacturing, construction and services sectors, suggesting the economy returned to growth in the first quarter of the year.

However, the picture is not clear as influential forecaster, the Organisation for Economic Co-operation and Development, believes the UK probably entered recession in the first three months of the year.

Despite the tentative signs of improvement and evidence that the Bank's American counterparts at the Federal Reserve are increasingly moving away from further QE, some economists expect another multi-billion cash injection later in the year.

Howard Archer, chief economist at IHS Global Insight, said no change in monetary policy was a "dead certainty" but believes there is still a possibility of more QE later in the year.

He added: "We have a sneaking suspicion that the Bank of England is not quite yet done on the QE front. This reflects our belief that the economy is likely to stutter over the coming months and a majority of MPC members may feel that a final small helping hand is in order."

Fewer members of the Fed said more QE in the US could be necessary in the future at its March meeting than in previous months, according to minutes published on Tuesday.

However, investors were not convinced by the Fed's optimism and the FTSE 100 Index fell by more than 1% after the minutes were published.

Two of the MPC's nine members are expected to repeat calls for an additional £25 billion QE boost but are set to be outvoted by those who do not want to rush into pumping more money into the economy as it could push up inflation.

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