Commenting on today’s decision from the Bank of England Monetary Policy Committee to maintain the Bank Rate at 0.5 percent and to increase the asset purchase programme by £50 billion to £375 billion, KPMG Chief Economist, Andrew Smith, said:
“This latest tranche of QE reflects the Committee’s deep concern that, far from recovering, after flat-lining for two years the economy is in the middle of a renewed downward lurch. The technical recession at the turn of the year has extended into the summer and recent survey evidence points to further weakening to come. With inflation now rapidly falling back towards target, the decision was a no-brainer.
“Effectively, the Bank has torn up the forecast it made only two months ago. With domestic demand set to be undermined as public spending cuts bite, and the eurozone crisis stymieing any chance of export-led growth, projections of ½ - ¾ % growth this year now look like pie in the sky.
“Renewed QE should provide some boost by holding down borrowing rates but is no silver bullet. More imaginative monetary policies - and perhaps even a fiscal stimulus - may be required to counteract the contractionary forces which are now gripping the economy.”
For further information please contact:
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 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.