April 4, 2013 12:00 pm

BoE policy makers hold rates and QE

The Bank of England has decided not to restart its bond-buying programme this month amid mixed signals on the health of the fragile UK economy.

In a widely expected move, the Monetary Policy Committee on Thursday kept the stock of asset purchases in its quantitative easing programme on hold at £375bn. It also kept the BoE interest rate at an all-time low of 0.5 per cent.

The decision comes after the Bank of Japan stunned investors by announcing an ambitious new strategy to combat deflation.

The BoE is also under political pressure to do more to stimulate growth after more than two years of economic stagnation. Sir Mervyn King, the governor, was in a minority of three on the MPC in February and March who voted for more quantitative easing.

However, economists have pointed to recent official and unofficial data that suggest the large services sector is starting to pick up some momentum on its own.

They also think any move from the BoE will be more likely in May, following the first estimate of economic growth in the first quarter, and coinciding with the central bank’s quarterly Inflation Report.

In an attempt to inject new ideas and ambition into the central bank, George Osborne, chancellor, appointed Mark Carney, the governor of Canada’s central bank, as BoE governor. Mr Carney will arrive at the BoE in July.

He has also tweaked the BoE’s remit to allow the MPC to make more explicit trade-offs between inflation and growth.

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