The Bank of England's £200bn quantitative easing programme is unlikely to be extended today when its Monetary Policy Committee (MPC) discloses the result of its monthly meeting.
The Governor, Mervyn King, told the Commons Treasury Select Committee last week that the MPC was ready to inject more money into the financial system to support what is expected to be a sluggish recovery. However, after a raft of better than expected economic data in the past few weeks, most expect the Bank not to act on QE. "The odds are strongly in favour of the MPC keeping the quantitative easing programme on hold, particularly as the latest data suggest that economic activity bounced back in February from a significant weather-related hit in January," said Howard Archer, chief economist at IHS Global Insight.
The MPC is also expected to keep interest rates at their record low of 0.5 per cent. The MPC is facing pressure to raise rates, especially after Mr King was forced to write to the Chancellor last month when inflation overshot the Government's 2 per cent target.
But the Bank's February Inflation Report says it expects prices to track lower again later this year, and the inflation spike was due to one-off adjustments.Reuse content