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No set plans for further easing

MPs have been told by Bank of England governor Mervyn King the bank has no “hard or fast expectation” to increase the amount of quantitative easing.

Last month, the bank’s monetary policy committee sanctioned using a further £50bn of new money to purchase Government gilts, taking the total QE programme to £325bn.

Minutes from the MPC’s meeting show external members Adam Posen and David Miles wanted £75bn to be pumped into the economy but the minutes said this “risked sending a signal the committee thought the economic situation was weaker that it was”.

Giving evidence to the Treasury select committee last week, King said the European debt crisis and a lack of lending by banks continue to pose a threat to the economy.

He said although further QE is not expected imminently, that could change if the economy worsens.

King said: “By and large, I do not think there is any hard and fast expectation that we are inevitably going to do much more. We will take whatever action we think is appropriate and at that point, expectations will adjust.”

Posen told the select committee the risk of inflation not meeting the bank’s 2 per cent target over the medium term is now broadly balanced. He said he does not see an urgent need for more QE.

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