MPC Meeting - Quantative easing: A halt..for now
At its February meeting, the Monetary Policy Committee (MPC) voted not to extend its asset purchase programme this month. Andrew Smith, KPMG Chief Economist commented:
"The MPC is as uncertain about the outlook for the economy as everyone else. It has decided to sit pat on quantitative easing - but has hedged its bets by explicitly leaving the door open for an extension of the programme if conditions warrant it in the future.
"This is hardly surprising. Official data suggest that recovery, albeit weak, has started, while inflation is set to rise further above target in the next few months. Now is an obvious time to pause and see what develops, while not ruling out any options.
"Although the MPC may not be relaxing policy any further at the moment, it will not be in any hurry to tighten either. The recession has left a large amount of spare capacity, suggesting that the rise in inflation will prove temporary; consumers remain highly indebted and in no position to bounce back; and a fiscal squeeze is coming. Monetary tightening is still a long way off."
For more information:
Mark Hamilton, KPMG Press Office: mark.hamilton@kpmg.co.uk
Tel: 020 7694 2687
About KPMG:
KPMG is the global network of professional services firms who provide audit, tax and advisory services. KPMG LLP operates from 22 offices across the UK with nearly 11,000 partners and staff. KPMG in the UK recorded a turnover of £1.6 billion in the year ended September 2007. KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.