Business groups across the UK are urging the Bank of England’s Monetary Policy Committee (MPC), to inject more stimulus into the limping economy. Support for this action is growing within the MPC, as Adam Posen has already made it clear that he feels strongly in favor of more Quantitative Easing. This topic is of hot debate before the upcoming meeting of the MPC.
It is believed by several economists that a three way vote will emerge this week during the monthly meeting. Posen will opt for more QE, as Sentance will encourage a boost in the base rate to ease the possibility of quick rising inflation. It is predicted the majority of the MPC will continue to play a wait and see game and make the decision to do nothing.
Capital Economics’ Vicky Redwood, commented on what could be a decision leaning in one direction at least, saying: “Slowly but surely the MPC appears to be giving the economy another dose of medicine.”
She continued to say it is highly improbable “developments over the past months will have been enough to prompt a majority vote for more stimulus this month.”
Howard Archer, chief economist at HIS Global Insight, thinks the MPC will make no moves before they see the third quarter growth figures later this month, as well as details of the Government spending review.
Chancellor George Osborne stands by his original belief that if the economy does happen to stumble further, he expects the Bank to step up and take action, compared to the Treasury reversing some of the proposed cuts.