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BOE Expected to Hold QE
Submitted by Tradervox 2 on Thu, 02/08/2012 - 13:32
Tradervox.com (Dublin) – The Bank of England is expected to maintain the current quantitative easing program as officials meet today. Analysts expect the Monetary Policy Committee to give its assessment of the current measures taken by the Central Bank that include the bank-funding plan and the stimulus expansion programs aimed at boosting credit to spur recovery from the nation’s double dip recession. The committee led by the Bank of England Governor Mervyn King will use the recent economic forecast to gauge whether the additional 50B pound quantitative easing program promised will protect the economy from escalating euro area turmoil. The market expects bond-purchases kitty to remain at 375 billion pounds.
In its recent meeting, the BOE announced an extension of its crisis fighting toolkit, establishing the Funding for Lending Scheme aimed at availing bank credit. Further, the expected “big announcement” by the ECB will give a new direction in tackling the eurozone debt crisis. But with all these significant measures being taken by central banks, there remains a deteriorating outlook with major banks such as Morgan Stanley and Barclays Plc revising their forecasts. There are also speculations of more UK stimulus later in the year. Economists such as Ross Walker who is an economist in London at Royal Bank of Scotland Group Plc have indicated that the recent data from UK have been disappointing but the BOE is likely to monitor the progress of the measures it announced in July prior to adding more.
The BOE announcement which is expected to happen at noon will come just a week after report showed that the economy shrank by 0.7 percent, and the country’s July factory output shrank by most in three years according to report released yesterday. The poor data from UK have led to a decline in pound’s strength, weakening for the third day against the euro to trade at 78.76 pence this morning in London. The currency had closed the day at 78.69 pence yesterday. However, the UK currency showed some strength against the dollar, increasing by 0.1 percent to trade at $1.5555.
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