Bank Of England Adopts QE 'Wait And See'

The Bank of England (BoE) has announced it will not pump more money into the UK economy this month.

The move follows the country's official exit from recession - but the BoE will be watching the recovery closely.

It was a decision widely expected by economists following the positive GDP performance in the third quarter of the year.

The bank's Monetary Policy Committee (MPC) confirmed at midday there was no extension to its programme of Quantitative Easing (QE) following its latest meeting.

The MPC has made £375bn of asset purchases to date amid the effort to boost money supply in the UK economy following the financial crisis.

Forecasters had initially predicted that total would be boosted by £50bn but the 1% growth in the economy measured over the three months to September largely silenced such talk.

Nevertheless, the MPC will be closely scrutinising the economic statistics over the next few weeks amid signs of a mixed picture.

A recent run of weak purchasing managers' surveys for the services, manufacturing and construction sectors in October have given credence to expert warnings that the underlying picture is much bleaker than the GDP numbers suggest.

The MPC decision - which also confirmed the base rate of interest at its historic low of 0.5% - preceded that of the European Central Bank which also left the eurozone's benchmark interest rate steady at 0.75%.

The Bank of England's move was predicted by all five members of the Sky News Money Panel.

Ross Walker, Senior UK Economist at RBS, said: "Recent data show a modest improvement - GDP, employment, revisions to the public finances -and MPC rhetoric suggests a waning enthusiasm towards further QE.

"Monetary policy appears to be transitioning away from quantitative- and towards credit-easing. "The Funding for Lending Scheme (FLS) is becoming the MPC's principal focus and there remains little sense that a Bank Rate cut is a serious runner at this time."

On the subject of the FLS, James Daley, editor of Which? Money was concerned the money got to the people who really needed it.

"We know that some of this money has been used by banks to lend to low risk, better off customers who are not the people who most need support," he said.

"Thousands of people are trapped on their bank's standard variable rate - and are unable to get a better deal as no one will take them. It's these mortgage prisoners who should be being helped out by the Funding for Lending Scheme."

Anthony Thomson, the founder of Metro Bank, ruled out more QE for at least the next six months. He said: "As the economy starts to improve, albeit tentatively, we will see further growth in GDP and this will reduce the need for further stimulus of this nature, and the impetus will move to providing credit to SMEs."

Louise George, the owner of Peter Popple's Popcorn, admitted she was concerned about growth. "Although the recession is officially over - there hasn't been a huge growth spurt and for our business it is still tougher to sell a premium product when people are still watching what they spend."

She called on the Chancellor to provide more support to small firms in his Autumn Statement next month.

Sir Martin Sorrell, chief executive of FTSE 100 advertising giant WPP, echoed her wish for a Government strategy to help smaller companies.

He said: "I think the Coalition Government is doing the right thing - trying to get revenue and costs into balance in the short term and starting to put together a more comprehensive long term strategy.

"The one thing that I think still needs to be done is articulating the overall growth strategy. "Lord Heseltine has tried to do this recently but still more needs to be done.

"The UK is in better shape now than it was a couple of years ago but we still do not have a comprehensive view on the future strategy. "I think the Autumn Statement is a big opportunity to identify the key growth levers and lift people's eyes from their boots to the horizon.

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