Economy cash boost likely - but not yet

 

Further emergency support for the economy is on the cards, according to minutes of a Bank of England meeting, but it is likely that no action will be taken before February.

The nine-strong Monetary Policy Committee (MPC) voted unanimously in favour of holding the level of quantitative easing (QE) at £275 billion this month, following October's decision to inject a further £75 billion into the economy.

While some MPC members said current risks to the recovery - such as the threat posed by the eurozone debt crisis - could warrant another round of QE in due course, the committee saw "little merit in fine tuning" at this stage.

The MPC, which also voted unanimously in holding interest rates at historic lows of 0.5%, said October's boost would take a further three months to complete and it would be difficult for the markets to cope with a further increase within this period.

Vicky Redwood, chief UK economist at Capital Economics, said the minutes suggest the committee will boost QE - although not until February.

The minutes are published a week after the Bank revealed its quarterly inflation report, in which it forecast a heightened risk of a double-dip recession and paved the way for another bout of QE.

Bank governor Sir Mervyn King sent a stark message to political leaders as he flagged an unresolved eurozone debt crisis as the "single biggest risk" to the economy.

The worsened prospects for the UK economy mean inflation is likely to fall far quicker than previously estimated, hitting the Government's 2% target in the second half of next year before falling to as low as around 1.3% in 2013.

But the MPC noted in the November minutes it was a possibility that inflation will fall slower next year than the pace implied in its central projections.

Howard Archer, chief UK and European economist at IHS Global Insight, said the QE stock is likely to increase to as much as £375 billion by the second quarter of 2012.

He said: "Despite some concerns within the MPC that inflation may not fall back as quickly as expected by the Bank of England, it still seems very much a question of when will further quantitative easing occur and how much more?"

The MPC said the threat of the worst risks from the eurozone debt crisis crystallising had increased and worsened the strains on bank funding and financial markets more generally.

Members reiterated their belief that the UK economy would stagnate in the final quarter of the year, following 0.5% gross domestic product growth between July and September.

David Kern, chief economist at the British Chambers of Commerce (BCC), said QE would help boost demand but would not be enough to support businesses.

He said: "We expect the Chancellor to announce a major credit easing programme in next week's Autumn Statement, and we hope that the MPC will play its part to support this plan."

Chancellor George Osborne unveiled proposals to introduce credit easing - purchasing corporate bonds from private sector companies to provide much-needed finance - at the Conservative Party conference last month.

PA

Arts and Entertainment
The cast of The Big Bang Theory in a still from the show
tvBig Bang Theory filming delayed by contract dispute over actors' pay
Sport
England celebrate a wicket for Moeen Ali
sportMoeen Ali stars with five wickets as Cook's men level India series
News
Morrissey pictured in 2013
people
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmThe film is surprisingly witty, but could do with taking itself more seriously, says Geoffrey Macnab
Life and Style
food + drinkVegetarians enjoy food as much as anyone else, writes Susan Elkin
Life and Style
tech
Life and Style
lifeDon't get caught up on climaxing
Arts and Entertainment
Harry Potter (Daniel Radcliffe), Hermione Granger (Emma Watson) and Ron Weasley (Rupert Grint)
newsBloomsbury unveils new covers for JK Rowling's wizarding series
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

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Accountant / Assistant Management Accountant

Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star