Further £50bn QE likely
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The Bank of England is expected to increase its quantitative easing programme by £50bn this week to £325bn.
The Bank’s monetary policy committee is likely to announce the move on Thursday, whilst keeping interest rates at 0.5 per cent.
The minutes from the MPC’s January meeting show that the committee believes inflation will continue to fall sharply in the coming months, from its current level of 4.2 per cent, towards its target of 2 per cent.The current programme of asset purchases was due to be completed by early February.
The minutes say: “The balance of risks to inflation in the medium term had changed little since November. For some members, the risks of undershooting the target meant that a further expansion of asset purchases was likely to be required.”
An economic report by IHS Gobal Insight says it is almost certain the Bank will announce further QE on Thursday.
It says: “We expect a £50bn dosage of QE, but a larger portion of £75bn cannot be ruled out even though this looks less likely given the recent improved economic surveys.”
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