Friday, May 10, 2013

Not any Bank Of Britain Incitement For UK Financial system


Feed: Business Yahoo UK
Posted on: Thursday, May 09, 2013 19:41
Author: Business Yahoo UK
Subject: No Bank Of England Stimulus For UK Economy

 

Signs of stronger growth in the UK economy seem to have stopped the Bank of England introducing fresh stimulus.

The monetary policy committee (MPC) stopped short of adding to its £375bn programme of quantitative easing (QE) since it emerged that the UK had avoided a triple-dip recession in the first quarter of 2013, achieving better than expected GDP growth of 0.3%.

As was also expected, the MPC kept the base rate of interest at its historic low of 0.5% - the level it has been at since March 2009.

Encouraging signs of a pick up in economic growth in the second quarter are likely to have tipped the balance at this month's meeting after outgoing bank governor Sir Mervyn King joined two other policymakers last month in supporting more stimulus.

That vote took place before it was known that the UK had escaped a new recession.

The results of today's voting, out later this month, will show if the 'QE 3' continued to back another £25bn in stimulus - despite that economic growth - or fell more in to line with the other six policymakers who had previously raised fears about weakening sterling further and stoking inflation.

The rate-setters might have also wished to wait and see the impact of the Bank's newly beefed-up Funding for Lending scheme, now focused on helping small and medium businesses to borrow much-needed working capital.

However, despite the more positive signs, some economists believe persistent weakness - coupled with the risk that the eurozone crisis could snuff out any nascent recovery - mean the Bank will have to resume QE, though possibly not until after the arrival of new governor Mark Carney in July.

 

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