Bank leans towards giving financial boost to economy
The Bank of England has given a strong indication that it is preparing to inject more money into the ailing UK economy.
The minutes from this month's meeting of the Bank's rate-setting Monetary Policy Committee showed that eight members voted to keep the Bank's Quantitative Easing programme on hold, while just one, David Miles, backed more stimulus.
However, in a sign that the MPC as a whole is leaning to more action to support the economy, the minutes noted: "For several members, the decision not to expand the asset purchase programme at this meeting was finely balanced and further monetary stimulus could be added if the outlook warranted it."
That was interpreted by City analysts as a sign that more stimulus could be on the way, possibly as early as June's MPC meeting.
"It won't take much to tip the Committee into doing more QE," said Samuel Tombs of Capital Economics.
Some MPC members have voiced concerns that inflation might not fall back as quickly as they expected, but yesterday the Office for National Statistics said the Consumer Prices Index dropped in March to 3%, giving the Bank more leeway for stimulus.
More evidence of the weak state of the economy came today from official figures showing that retail sales volumes in April fell by 2.3% on March, its biggest monthly drop since January 2010.
IHS Global Insight's Howard Archer said spending levels naturally fell back after a sharp increase in March prompted by fuel hoarding and last month's exceptionally wet weather also deterred shoppers.
But Archer added there was little reason to expect a sharp rebound soon. "There is a very real worry that already low and brittle consumer confidence will have taken a significant hit from the news that the UK is back in recession, and this will lead to increased caution in spending," he said.
The International Monetary Fund yesterday urged the Bank of England to support the UK economy by pushing through more QE.
What the Consumer Prices Index dropped to in March