RTTNews - All nine members of the Monetary Policy Committee unanimously decided to continue with its quantitative easing measures worth GBP 125 billion and also stood united in retaining the Bank Rate at a historic low of 0.5%, the minutes of the Bank of England showed Wednesday. The meeting was held on July 8 and 9.
The MPC noted that the central bank would purchase the assets to meet the current GBP 125 billion target using central bank reserves at a slower rate over the next month than it had under the programme so far. Further, the purchases would continue up until the next policy meeting in August.
The minutes said, The Committee would keep the scale of the programme under review, and the preparation of the August Inflation Report offered an opportunity to reassess the stock of asset purchases in the light of a fully updated assessment of the outlook for inflation and growth at its next meeting.
Members noted that little evidence had emerged since May that change the assessment about the broad shape of the prospects for the economy in the medium term, though the downside risks to economy in the near term had probably diminished.
According to members, mapping between the surveys and the likely outcome for GDP was uncertain. However, the surveys were in line with a smaller decline in the second quarter GDP than the Committee had anticipated two months ago.
The turnaround in the stock cycle, the sustainable policy stimulus and the weakness in sterling would underpin economic activity. But balance sheet constraints of financial sector both at home and abroad could act as a restrain in lending and hold back the recovery, the minutes said.
Earlier in the day, the think tank National Institute of Economic and Social Research said the economy is set to recover next year with 1% growth and 1.8% in 2011.
The Office for National Statistics is set to release the second quarter GDP data on July 24. After experiencing the largest contraction since 1958, economists now expect the economy to shrink 0.3% sequentially in the second quarter.
The latest Agents' summary of business conditions found that a significant number of contacts reported that they have reduced employees' hours in response to the slowdown in demand since late 2008. Many had slashed permanent staffing levels also. Looking forward, many firms are expected to trim headcount a little further.
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