Quantitative Easing signs 'encouraging'
Updated on 22 April 2009
There has been "encouraging" early signs from the £75 billion quantitative easing programme, according to Bank of England policymakers.
The Bank said it is encouraged by the initial impact of the £26.5 billion of assets bought so far under the unprecedented scheme which is designed to create new money and increase the flow of lending to households and businesses.
But according to minutes of the April interest rate meeting, the nine members of the BoE's Monetary Policy Committee (MPC) said there remained a "high degree of uncertainty" over the scale of the asset purchases needed for the unprecedented move.
Yields on Government gilts have fallen significantly, although some of this had already been reversed and the MPC also warned it was possible the effect would only last as long as the asset-buying programme, due to take a further two months to complete.
The meeting's minutes showed the MPC voted unanimously to stick to the multi-billion-pound plan to boost money supply and to leave interest rates unchanged at their historic low of 0.5 per cent.
The "no change" decision saw rate setters pause for breath after six months of dramatic cuts from the MPC to tackle a deepening recession.
Economist Howard Archer, of IHS Global Insight, said the minutes suggest no further rate cuts are on the way.
He said: "The MPC's 9-0 vote in favour of unchanged interest rates in April and general tone of the minutes reinforces belief in the view that interest rates have very likely troughed at 0.5 per cent."
He added the Bank also left the door open for a possible extension of its QE programme.
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