After a two-day meeting, the MPC voted not to increase its quantitative easing (QE) programme, which involves buying Government bonds, having already bought £375bn’ worth since the beginning of the economic slump. It also kept its main interest rate at the record low of 0.5 percent, as predicted.
Until recently, forecasters had predicted that QE would be boosted by a further £50bn but the unexpected 1 percent growth in the economy measured over the three months to September largely precluded that.
However, the MPC will be closely scrutinising economic statistics over the next few weeks amid signs of a mixed economic landscape. A recent run of weak purchasing managers' surveys for the services, manufacturing and construction sectors in October suggest that the underlying picture is much bleaker than the GDP numbers suggest.
The Bank launched the FLS in July, which is aimed at encouraging banks and building societies to increase the size and frequency of loans they make to consumers and small businesses.
Under FLS, the Bank lends money to financial institutions at below market rates, and offers a better deal to those who make the most loans. However, as yet there is no published data showing how well the scheme is going.
The MPC decision preceded that of the European Central Bank (ECB), which also left the Eurozone's benchmark interest rate steady at 0.75 percent.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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