Commenting on today’s decision from the Bank of England Monetary Policy Committee to maintain the Bank Rate at 0.5 percent and to maintain the asset purchase programme at £325 billion, KPMG Chief Economist, Andrew Smith, said:
“With the economy showing no sign of recovery and the Monetary Policy Committee’s central forecast predicting inflation will trend back to target within two years, it is a bit surprising that the MPC has chosen to sit on its hands again.
“Economic data will be distorted this quarter and next by the Jubilee holiday and upcoming Olympics, so amongst all the noise it will be difficult to ascertain the underlying state of the economy. But the big picture is that output has been essentially flat for the past 18 months and there is no reason to expect any significant change in the short term.
“While QE is no silver bullet, the probability of weak growth (at best), and the confirmation that inflation has resumed its downward trend, is likely to lead the Committee to conclude that more stimulus is worth another shot, and sooner rather than later.”
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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.