BoE policy makers voted 9-0 to keep interest rates on hold

| September 23, 2009
”BoE

Minutes of the Bank of England’s September meeting have been released today and have revealed that the Monetary Policy Committee (MPC) voted unanimously this month to keep interest rates at the historic low of 0.5%.

Furthermore, the Bank also opted to leave its quantitative easing programme unchanged at £175 billion and said it would not extend it.

While the news comes as no surprise, the minutes do show that MPC members are fearful of “false dawns” and are worried over an “uncertain” recovery.

Despite signs of positive economic data of late, members of the MPC are cautious with the minutes saying: “The lesson from previous financial crises was that they were not resolved quickly, and that there could be false dawns.”

At the August meeting, Mervyn King, the Bank’s Governor, along with Tim Besley and David Miles, voted for a larger cash injection of £75 billion.

September’s minutes said: “For those members who had preferred a larger stimulus at the August meeting, a larger asset purchase programme could still be justified”.

According to Howard Archer, chief UK and European economist at IHS Global Insight, the MPC is “very much in wait and see mode, having only just raised the QE programme by a further £50 billion to £175 billion in August.”

“The bottom line is that the MPC still appears open to further extending quantitative easing if bank lending fails to pick up and /or the recovery shows signs of faltering,” added Mr Archer.

Today, the Confederation of British Industry (CBI) said that the UK economy probably exited recession during the July to September period but warned that growth next year will be ‘fragile‘.

The business group is forecasting that GDP will expand by 0.3% in the third quarter, compared with the second quarter and will grow by 0.4% between October and December.

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