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 was probably close but the decision by the Monetary Policy Committee to hold fire on announcing further QE this month was expected.
“After all there is some good news out there if you want to find it. The 1 percent bounce-back in GDP in the last quarter may have been primarily the result of temporary factors, but means we are out of recession. This return to growth, in combination with an expectation that inflation may not now fall as far or as fast as previously hoped, probably persuaded the MPC to wait and see.
“But the economy is already showing signs that it has failed to carry momentum from the summer into the fourth quarter. And the big picture is that output continues to do no more than bump along the bottom as it has for the past two years. GDP is still some 3 percent below its peak and with continuing domestic headwinds, the threat of an escalation of the crisis in the euro-zone and only slow progress in rebalancing the economy the recovery is set to remain fragile. With this in mind further monetary stimulus should be expected in the New Year.”
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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 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 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.