All nine members of the Bank of England’s Monetary Policy Committee (MPC) voted for quantitative easing (QE) in October’s meeting, suggesting that the bank’s steering group is likely to continue the programme.
The minutes also show that the MPC was also unanimous in its decision to hold interest rates at 0.5 per cent, dampening speculation that the bank was considering a further rate cut to 0.25 per cent.
Slowing economic growth prompted the bank to inject £75 billion into the financial system through a programme of gilt purchases in October.
The UK has seen a raft of weak economic data, including spiralling unemployment and sliding retail sales, in the past few weeks. Business confidence has also begun to fall, with companies hoarding cash and holding back on investments.
Inflation figures spiked at 5.2 per cent in September, as fuel and food price rises, as well as the government’s value added tax (VAT) increase from 17.5 per cent to 20 per cent, put upward pressure on prices, although with inflationary pressures subsiding, it seems likely that the figure will fall back significantly in 2012, meaning that the Bank of England has few barriers to continuing with QE.