MPC members in 'wait-and-see mode' - ITEM Club comments on today's MPC minutes

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Nida Ali, economic advisor to the EY ITEM Club, comments on today’s MPC minutes:

  • No indication of further monetary support as MPC members are in wait-and-see mode
  • But risks from the Eurozone remain significant and, were they to materialise, the Bank would be forced to loosen monetary policy further

“Having taken a number of policy initiatives over the past couple of months, such as raising the level of asset purchases by £50bn and introducing the Funding for Lending scheme, MPC members are now in wait-and-see mode to judge how they feed into the UK economy. Therefore, despite their downbeat view of the economy, which was evident from the downward revisions to growth in last week's Inflation Report, there was no indication of any further loosening of monetary policy.
“In our view though, risks from the Eurozone remain significant. Therefore in the event that any of the adverse outcomes of the crisis materialised, the Bank would be forced to provide far greater monetary support, both in the form of more QE as well as an extension of the other policy measures introduced recently.”