United Kingdom Monetary Policy

United Kingdom

United Kingdom: Bank of England embarks in further quantitative easing

February 9, 2012

At its 8-9 February meeting, the Bank of England (BoE) decided to increase the size of its asset purchase programme ? commonly referred to as quantitative easing ? by GBP 50 billion to a total of GBP 325 billion. The move was expected by most market analysts, as members of the Monetary Policy Committee (MPC) had stated in their previous meeting ?that a further expansion of asset purchases was likely to be required?. The BoE left the Bank rate unchanged at 0.50%. According to the minutes released on 22 February, the MPC ?judged that the weak near-term outlook for growth and the associated downward pressure from slack in the economy meant that, without further monetary stimulus, it was more likely than not that inflation would undershoot the 2% target in the medium term?. As a result, seven members of the MPC, including BoE governor Mervin King, voted in favour of expanding the asset purchase programme by GBP 50 billion, while the remaining two members were in favour of a larger GBP 75 billion increase. All nine members of the MPC voted in favour of leaving the Bank rate unchanged at 0.50%.


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