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Wednesday, November 17, 2010

England Bank Policy Split Remains

England Bank Policy Split Remains ; Bank of England policymakers were divided again this month over whether to raise interest rates or pump more cash into the economy, newly-published minutes of their meeting show.Following the same pattern as October, one of the Monetary Policy Committee (MPC) wanted more quantitative easing (QE), another wanted an interest rate hike and the rest opted for no change in policy.

The MPC's split came following surprisingly high inflation data and robust growth figures. MPC member Adam Posen reiterated his call for another £50bn in QE efforts to support the economy, but failed to gain backing from any of his rate-setting colleagues. And Andrew Sentance maintained his vote for a quarter point rise in rates to calm inflation.

Sterling rose after the minutes from the November meeting were published, as there had been some speculation that one or more members of the MPC would join the call for a resumption of QE, which would push down the value of the pound.

Details of the meeting followed Tuesday's inflation figures that revealed another rise above the Bank's 2% target, to 3.2% in October. Inflation has remained above target this year and is expected to remain strong in 2011, putting pressure on the Bank of England to raise interest rates.

But fears over the growth outlook, especially ahead of big Government spending cuts next year and given concerns about Europe's economic stability, mean the Bank must be careful not to choke off Britain's recovery by lifting rates too early. "The committee continues to believe that taking any decisive action at the moment would be premature and is content to 'wait and see'," said Nida Ali, economic advisor to the Ernst & Young ITEM Club. For the latest updates PRESS CTR + D or visit Stock Market news Today

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