Belfast Telegraph

Bank of England governor Sir Mervyn King to say farewell and call for cash boost

by Holly Williams

Outgoing Bank of England boss Sir Mervyn King is expected to bow out with one last call for more economy-boosting measures this week when he gathers with policymakers for his final interest rates meeting.

Having maintained his vote for another £25bn cash injection at the May meeting, Sir Mervyn is likely to stick to his guns again.

But mounting signs of economic recovery are expected to see the Governor and two fellow members of the Monetary Policy Committee (MPC) outvoted once more in their call for more quantitative easing.

Sir Mervyn gave his most upbeat signal yet over the UK's recovery from the financial crisis on presenting the bank's recent inflation report – his last before Canadian bank boss Mark Carney takes over on July 1.

He said growth will be a "little stronger" than previously hoped, with the economy predicted to expand by 0.5% in the second quarter of this year, marking the bank's first growth upgrade since the financial crisis.

The bank also forecast that inflation would not surge as much as feared, which was followed the week after by official data confirming the first easing in the annual rate of price rises for six months – to 2.4% in April.

Optimism over the recovery has increased since official figures showed the UK avoided a triple-dip recession with 0.3% expansion in the first quarter.

The British Chambers of Commerce upgraded its forecast for growth in gross domestic product this year from 0.6% to 0.9%, and increased its longer-term outlook for the first time since before the recession.

Philip Shaw, economist at Investec, said it would be "improbable" that the MPC would shift policy this month and is set to keep QE at £375bn and rates at 0.5%.

Belfast Telegraph