Pressure on the Bank of England to return to the printing presses mounted yesterday as Japan became the latest central bank to take emergency action to spur flagging growth.
The Bank of Japan caught markets off-guard as its governor, Masaaki Shirakawa, warned that the recovery of the world's third-biggest economy might be delayed by six months due to ebbing global growth.
The bank – which has been battling deflation and slow growth for two decades – expanded its QE by 10 trillion yen (£79bn) and said a recent pick-up in the economy "has come to a pause".
Minutes of the latest Bank of England Monetary Policy Committee meeting, released yesterday, showed rate-setters unanimous in keeping interest rates on hold at 0.5 per cent and the scale of its QE operations at £375bn.
But one member – almost certainly the doveish David Miles – argued that there was a "good case" for announcing more action two weeks ago.
Although most MPC members are holding fire on more QE, waiting to assess the impact of the Bank's £80bn Funding for Lending scheme, the pound immediately sank against the dollar on the release of the minutes as markets factored in the chance of more QE action.Reuse content