Rate setters united in ‘wait and see’ approach to economy
Bank of England rate-setters were unanimous over their ‘wait-and-see’ policy on the economy this month, despite the UK's crawl out of recession, it emerged yesterday.
The Monetary Policy Committee (MPC) agreed that leaving efforts to boost the money supply at £200bn and interest rates at 0.5% would allow more time to judge the impact of support to the economy over the past 18 months.
Minutes of the February meeting said there was a case for more quantitative easing but it saw little point in attempts to ‘fine-tune’ policy amid so much uncertainty.
Despite the ‘disappointing’ 0.1% growth for the economy in the final three months of 2009, the MPC judged further stimulus could push up asset prices and fuel inflation expectations — although for some members the decision was ‘finely balanced’.
Rate-setters added that January’s official GDP figures ‘might be understating’ the true pace of the recovery with retail sales, car registrations and rising house prices signalling returning confidence.
But credit conditions were likely to remain tight for some time, the minutes added, and there were doubts over the extent of the permanent damage inflicted on the economy by the recession.