Bank of England fuels speculation that its close to ending QE programme
THE Bank of England fuelled speculation that it is close to ending its multibillion-pound quantitative easing programme today after deciding against a further cash injection
Recent speeches from Bank governor Sir Mervyn King and his deputy Paul Tucker, as well as minutes of recent meetings, have questioned the impact of further so-called asset purchases.
Today's decision not to change policy added to the belief that QE could be knocked on the head and the Bank's policymakers would have to look elsewhere to provide the much-need stimulus to the economy.
Chris Williamson, chief economist at financial information services company Markit, said: "The lack of any decision probably not only reflects uncertainty about the health of the economy but also doubts about the effectiveness of policy even if more stimulus was considered appropriate."
The Bank has turned to new measures to stimulate the economy, such as the Funding for Lending scheme, but this is in its early stages so it is too soon to assess its impact.
But Stephen Boyle, head of group economics at Royal Bank of Scotland, said further QE should not be ruled out.
"With question marks over the effectiveness of more quantitative easing, the MPC (Monetary Policy Committee) is undoubtedly waiting to see the impact of its Funding for Lending Scheme," he said. "But with signs that the economy is slowing down, one shouldn't rule out further QE in the future."