MINUTES from the latest meeting of the Bank of England’s Monetary Policy Committee will shed light on its likely reaction to any change to its remit which the Chancellor may announce in this week’s Budget.
The MPC held off from printing more money this month, but economists are keen to see whether there was once again a split after bank governor Sir Mervyn King voted to restart the presses in February. With Britain poised on the brink of a “triple dip” recession, it is only a fear of stoking inflation that is holding back the bank, and George Osborne is rumoured to be about to widen its remit to tone down its emphasis on prices.
With the minutes due to be published shortly before the Chancellor’s Budget speech on Wednesday, a close vote will be interpreted by many as making further quantitative easing (QE) a sure bet.
Economist Howard Archer, of IHS Global Insight, says it is possible that the MPC decided to hold off from more QE in March because members wanted to see what measures the Budget would bring. Since their meeting the Chancellor has hinted he will stick to his “plan A2” of deficit reduction, leaving the coast clear for the bank to push for growth.
Archer expects more QE before the summer, adding: “The Bank of England is looking for other ways of helping the economy, particularly in trying to get more working capital through to smaller companies.”