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MPC’s Broadbent ‘hints at more quantitative easing’

Ben Broadbent’s latest speech supports the view that the Bank of England may soon embark on a second round of quantitative easing, according to IHS Global Insight.

Speaking at Thomson Reuters in London today, Broadbent (pictured), an external member of the bank’s Monetary Policy Committee, said the “international environment is clearly disinflationary”.

He also claimed “a further tightening in retail credit and a further slowing in domestic activity” is made more likely by the eurozone sovereign debt crisis and the rising costs of finance for banks that follow in its wake.

In addition, Thomson Reuters reports Broadbent as saying he was “reasonably close” to voting for more quantitative easing during the MPC’s meeting in September when answering questions after the speech.

Howard Archer, the chief UK and European economist at IHS Global Insight, says these comments support the opinion that another bout of asset purchases could be unveiled by the Bank in the near term.

“We currently expect the Bank of England to announce a further £50 billion of quantitative easing by November, taking the stock up to £250 billion,” Archer adds.

The economist also claims it is “very possible” the Bank could make this move as early as next week, should forthcoming data show further weakening in the UK economy and if the global economy fails to demonstrate signs of recovery.

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