Commenting on today’s decision from the Bank of England Monetary Policy Committee to maintain the Bank Rate at 0.5% and to maintain the asset purchase programme at £325 billion, KPMG Chief Economist, Andrew Smith, said:
“This was no great surprise - after all with conflicting evidence, the wisest course of action is often to do nothing. The Committee faced a tough dilemma with GDP coming in weaker than expected and inflation higher.
“Confirmation that the UK economy has returned to recession would have encouraged consideration of further stimulus, but with inflation not falling as fast or as far as previously hoped, the MPC has erred on the side of caution.
“QE is no silver bullet, but the probability of continued weak growth (at best) and the expectation that inflation will resume its downward trend again shortly, is likely to lead the Committee to conclude that more stimulus is worth a 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.