Commenting on today’s decision from the Bank of England Monetary Policy Committee to maintain the Bank Rate at 0.5 percent and the size of the Asset Purchase Programme at £375 billion, KPMG Chief Economist, Andrew Smith, said:
“It comes as no surprise that the Monetary Policy Committee has decided to sit on its hands again. After all, since the last meeting the growth outlook has improved and inflation – which is running well above target - remains stubbornly high.
“So for now QE has been kept on hold, but this is unlikely to be the end of the story. The economy retains a large amount of spare capacity - which should restrict further price increases - and the recovery is likely to remain weak as households struggle against a backdrop of high debt and falling real wages, austerity measures continue to bite and our main export market – Europe- stagnates.
“Recently the MPC has been split over providing further stimulus and it’s unlikely the impasse will be resolved before the replacement of the current Governor in July – indeed we are now in a lame duck period. But as fiscal policy remains conservative, the Chancellor is putting a lot of weight on monetary activism. Over to you, Mr Carney.”
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Margot Cowhig, KPMG Corporate Communications
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KPMG Press Office: 0207 694 8773
Notes to editors.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.