Bank of England minutes reveal likely move to print more money

THE odds on the Bank of England launching a further round of money printing by the autumn shortened yesterday with news that policymakers are already mulling such a move.

Minutes of August’s meeting of the bank’s monetary policy committee (MPC) showed that members voted unanimously to hold fire, as was widely expected, considering the latest £50 billion package of quantitative easing only began in July and is due to run until November.

But the minutes also revealed that the group of nine discussed the case for an immediate increase in quantitative easing and that for some members the decision was “finely balanced”. The group noted that the UK economy has been broadly flat since the recovery stalled in late 2010, while inflation and the hike in VAT had eroded personal incomes.

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Howard Archer, chief UK economist at IHS Global Insight, said the Bank of England was highly likely to take further stimulative action to try and boost the struggling economy later this year.

“The minutes of the August meeting support belief that growth, not consumer price inflation, is by far the major worry for the MPC at the moment,” he said. “The MPC are unlikely to be hugely concerned by consumer price inflation moving back up to 2.6 per cent in July from 2.4 per cent in June, probably seeing it as volatility around a still declining trend.

“So further stimulative action remains very much on the cards should the economy fail to display signs of underlying improvement during the next few months.”

Economists predict that the bank will most likely deliver a further £50bn of stimulus in the fourth quarter, taking the total amount of money created since the financial crisis began to £425bn.

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