This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.

MPC split over size of QE required

  • Print
  • Comment

The Monetary Policy Committee was not unanimous in its decision to increase the size of the asset purchase programme by £50bn at its February meeting, minutes of the meeting reveal.

David Miles and Adam Posen voted to increase the size of the programme by £75bn to £350bn, but were outnumbered by the remaining seven members, who all opted to increase it by £50bn to £325bn.

The committee was unanimous on the decision to maintain the base rate at 0.5 per cent.

The minutes also reveal that the MPC’s decision to increase QE was driven by the view that the weak near-term outlook for growth and the associated downward pressure from slack in the economy meant inflation was likely to undershoot its 2 per cent target in the medium term without further monetary stimulus.

They show that the committee considered the arguments for increasing QE by either £50bn or £75bn.

The reasons put forward for the smaller advance include recent economic data suggesting growth might be stronger than expected in he near term, and the fact that short-term inflationary pressures remain.

The minutes say: “An increase of £50bn in the stock of asset purchases would represent a material monetary stimulus, and it was not clear that a stimulus larger than that was warranted at the current juncture.

“In addition, given market expectations, a larger increase risked sending a signal that the committee thought the economic situation was weaker than it was.”

  • Print
  • Comment

Daily Email Updates
If you enjoyed this article, sign up to receive the latest news and analysis from Money Marketing.

Money Marketing Awards 2015
Put your firm forward as the leading practitioner in your field. Adviser and Advertising categories are open to entries - Enter Now.

Have your sayEdit my profile/screen name

You must sign in to make a comment

Fund Data

Editor's Pick


Do you see the value in adviser trade bodies?

Job of the week

Latest jobs

View all jobs

Most recent comments

View more comments