MPC ‘still split’ over more QE

BANK of England policy-makers are likely to have remained divided this month on whether to pump more money into the economy.

Minutes from the central bank’s May meeting – to be published on Wednesday – will reveal the thinking among its monetary policy committee (MPC) ahead of the arrival of governor Mark Carney at the start of July.

Three of the nine MPC members have been arguing for more quantitative easing since February, led by out­going chief Sir Mervyn King, and analysts believe they remained in favour of further stimulus despite recent better news on the economy.

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There are fears that fresh money printing could fuel inflation, which is currently forecast to peak at 3.2 per cent this summer.

Martin Weale – one of the six MPC members who has continued to vote against further QE – said in a speech on Friday that policymakers should not be “inflation nutters” who would risk hurting growth in pursuit of the central bank’s 2 per cent inflation target.

Howard Archer, chief UK economist at forecasting group IHS Global Insight, said the decision to hold off from QE this month was “likely the result of a tightly split vote”.

He added: “On balance, we still think it is more likely than not that the Bank of England will do more QE. Meanwhile, interest rates seem likely to stay at 0.5 per cent through to the second half of 2015 at least.”