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Industry backs calling a halt to QE programme

BoE: Easing on hold
BoE: Easing on hold

Financial services commentators have welcomed the Bank of England monetary policy committee’s decision last week to suspend the quantitative easing policy.

The MPC voted to halt the £200bn QE programme and hold bank rate at 0.5 per cent for the 11th consecutive month.

Bestinvest senior investment adviser Adrian Lowcock says: “This is a sensible approach as there is a lot of uncertainty about how effective QE has actually been and its impact will con- tinue to work through the economy for some time.”

Newton Investment Management’s Paul Hensman says the decision is justified, given the stability in the economy, but adds that a tightening of monetary policy is unlikely.

He says: “The evidence of financial markets functioning normally and the signs of sta- bilisation in the broader economy justify at least a pause in the bank’s efforts.

“Given the widespread perception of the fragility of the recovery, indicated by the sluggish 0.1 per cent increase in gross domestic product in the fourth quarter and the like- lihood of fiscal consolidation ahead, this is unlikely to mark the start of an aggressive move to tighten monetary policy.”

Property Portfolio Rescue director Nick Hopkinson believes the Government committed too much to the scheme.

He says: “The Bank of England has dug a hole for itself by committing to such a vast quantitative easing programme and it is about time that the scheme was halted. QE and the artificially low base rate are combining to drive up inflation, creating another asset bubble.”

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