The Great Debate UK

QE pause shows there is a long way to go


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- Mark Bolsom is the Head of the UK Trading Desk at Travelex, the world’s largest non-bank FX payments specialist. The opinions expressed are his own. -

Thursday’s decision by the Bank of England to keep both interest rates and its asset purchasing programme on hold was hardly a surprise and had been largely priced in to markets.

However, the statement accompanying the decision was hardly a resounding vote of confidence in the British economy. Instead, it would seem that the MPC is in a quandary; on the one hand wanting to stimulate markets, but hamstrung, on the other hand, by the spectre of inflation.

The MPC, along with the rest of the market would have been hugely disappointed at first estimate of 0.1 percent growth during the last three months of the year. That figure is even more disappointing given the huge fiscal stimulus provided by the government, combined with the 200 billion pounds worth of quantitative easing that the Bank has already pumped into the financial system.