BoE deadlock over QE continues

By THIS IS MONEY
Updated:

 

Bank of England rate-setters stuck to their guns and split three ways again this month over whether the UK economy needs more or less stimulus.

The Bank of England at dusk

Deadlock: BoE split again over whether UK needs more stimulus or not

Minutes of the Bank's monetary policy committee show Adam Posen voted for a resumption of quantitative easing, Andrew Sentance repeated his call for a rate hike, and the other seven members wanted no change in policy.

The deadlock meant interest rates were left at 0.5% for yet another month.

The bank is now expected to remain in wait-and-see mode into next year when the economic picture may become clearer.

The MPC is 'aggressively on the fence', said Alan Clarke of investment bank BNP Paribas. But he believes that if economic growth disappoints the door isn't locked to more QE.

Philip Shaw, of bank and asset manager Investec, commented: 'With the split at 1-7-1 again it's not a huge surprise, but there had been some speculation that Posen might have been joined by one or more members in seeking more stimulus.

'We think that the result will be that the bank rate will stay at 0.5% for another year or so before rising and that the committee is likely to resist adding further stimulus via quantitative easing.'

RBS economist Ross Walker said: 'There is a bit of inertia creeping in and the risks are sizeable in both directions so there is a wait and see type feel.'

Elsewhere, official figures showed a drop in the number of people claiming unemployment benefit by 9,000 to 2.45m during the three months to September.

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