Economy: Bank of England leaves monetary policy on hold

BANK of England policymakers today voted against any fresh stimulus for the economy despite growing fears for growth amid the continuing eurozone debt crisis.

At the conclusion of its monthly meeting, the bank’s Monetary Policy Committe (MPC) left the base interest rate on hold at its record low of 0.5% and left its money supply-boosting programme of quantitative easing (QE) on hold at �275billion.

The decision was widely expected, with the MPC having surprised many commentators by injecting an extra �75bn of QE last month – earlier than some forecasters had expected and more than the �50bn predicted by those who had anticipated and increase.

Despite the on-going crisis within the eurozone, with both Greece and Italy facing political as well as economic turmoil, economists do not expect the MPC to take any further action until early next year, to allow time to assess what impact last month’s move on QE is having.

Since last months MPC meeting, it has emerged that the UK economy grew by a better-than-expected 0.5% in the third quarter of 2011.

However, with second quarter growth thought to have been held back by the unusually warm weather in April and the extra Bank Holiday for the royal wedding, many economists believe the third quarter figure was flattered by a “bounce back” factor and there are fears that the growth could go into reverse in the coming months.