David Prosser: The time for watching and waiting is over: the MPC needs to turn on the taps

 

Outlook So will they or won't they? When the nine members of the Monetary Policy Committee arrive at the Bank of England this morning to begin their monthly deliberations, they will know that the case for a renewal of the quantitative easing programme that has been in abeyance since November 2009 is now even stronger. The question is whether October is the month in which the MPC pushes the button.

It is difficult to think of many reasons why they should choose to delay. Last month, only Adam Posen cast his vote for more QE, but the minutes of the September deliberations revealed that several of his colleagues indicated they were close to joining him. Since then, Ben Broadbent, David Miles and Spencer Dale have all dropped heavy hints suggesting that it would not take much to secure their support.

The economic data has certainly deteriorated since last month's meeting. In the past 48 hours alone we have had depressing figures from the construction industry and manufacturing data that bettered expectations but warned of worse times ahead with export orders now stagnating. All the evidence from the rest of the economy in the past few days and weeks has pointed in the same direction.

On inflation, meanwhile, the issue that worries those who are more cautious about QE, the news has been slightly better. August's small rise, from 4.4 per cent to 4.5 per cent, was surprisingly modest given the very sizeable increase in utility bills that was included in the figures. The headline rate of inflation may rise a little further in the months ahead as utility bill increases, as well as the VAT rise and higher fuel costs, continue to contribute. But these will fall away at the beginning of 2012 and it is difficult to see why core inflation, currently stable, should not remain so.

The Chancellor of the Exchequer, for one, is clearly keen for the MPC to take the plunge. His speech to the Conservative Party conference on Monday more or less called for them to do so.

What, then, is the case for delay? Well, one might argue that it would be wise to wait for the quarterly economic growth figures, which will be available for the MPC's scrutiny at their November meeting. Or, if the MPC wanted, it could wait until December, when the Bank will have published its latest Inflation Report. The committee will also, by then, have heard George Osborne's autumn statement – not that they will be holding out much hope for any additional fiscal stimulus from that.

Against that, however, theever-more volatile situation in the eurozone has the potential to pile on the misery before the next MPC meeting. And if the data has been deteriorating in the UK, it has been falling off a cliff across much of the single currency bloc.

It is time for the MPC to be decisive. A few weeks back, the Bank published research suggesting its first round of quantitative easing boosted economic output by as much as 2 percentage points. A second round, at least initially, would not be of the same magnitude, so its impact would be less significant. But with the economy now flatlining, any lift at all is desperately needed.

Life and Style
Small winemakers say the restriction makes it hard to sell overseas
food + drink
Arts and Entertainment
A comedy show alumni who has gone on to be a big star, Jon Stewart
tvRival television sketch shows vie for influential alumni
Arts and Entertainment
Carrie Hope Fletcher
booksFirst video bloggers conquered YouTube. Now they want us to buy their books
News
Clare Balding
peopleClare Balding on how women's football is shaking up sport
PROMOTED VIDEO
Arts and Entertainment
Damien Hirst
artCoalition's anti-culture policy and cuts in local authority spending to blame, says academic
Sport
premier leagueMatch report: Arsenal 1 Man United 2
Arts and Entertainment
Kirk Cameron is begging his Facebook fans to give him positive reviews
film
News
i100
Sport
Jonny May scores for England
rugby unionEngland 28 Samoa 9: Wing scores twice to help England record their first win in six
Life and Style
fashionThe Christmas jumper is in fashion, but should you wear your religion on your sleeve?
News
ebooksNow available in paperback
Arts and Entertainment
Jason goes on a special mission for the queen
tvReview: Everyone loves a CGI Cyclops and the BBC's Saturday night charmer is getting epic
Arts and Entertainment
Jerry Hall (Hand out press photograph provided by jackstanley@theambassadors.com)
theatre
Sport
Tony Bellew (left) and Nathan Cleverly clash at the Echo Arena in Liverpool
boxingLate surge sees Liverpudlian move into world title contention
Voices
Neil Findlay
voicesThe vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Life and Style
food + drinkMeat-free recipes and food scandals help one growing sector
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

Reach Volunteering: Charity Treasurer

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible
Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

Look what's mushrooming now!

Meat-free recipes and food scandals help one growing sector
Neil Findlay is more a pink shrimp than a red firebrand

More a pink shrimp than a red firebrand

The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

Oeuf quake

Bill Granger's cracking egg recipes
Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

Terry Venables column

Wayne Rooney is roaring again and the world knows that England are back
Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

Abject leadership is allowing football’s age-old sores to fester

Those at the top are allowing the same issues to go unchallenged, says Michael Calvin