MPC members want more QE

Evidence that the Bank of England may not have finished with its quantitative easing (QE) programme might have emerged with the publication of the min…

Evidence that the Bank of England may not have finished with its quantitative easing (QE) programme might have emerged with the publication of the minutes of the latest Monetary Policy Committee (MPC) meeting.

The minutes of this month's meeting were published today (February 22nd), with, unsurprisingly, nobody voting to alter the base rate of 0.5 per cent, which will have been at its current level for three years come next month.

However, the question of QE remains and for those who are in debt, this may be important, because any further economic downturn could lead to a greater increase in unemployment than those taking place of late and with it a loss of income that could make meeting monthly payments impossible.

With a lot of workers being made redundant anyway, such problems are real for many and a debt management plan may be useful for individuals and families finding themselves in difficulty.

The idea of more QE is to increase the supply of money into the economy and thus oil the wheels in a way that could head off a new recession, something the MPC has been doing in recent months.

February's meeting agreed to £50 billion more of this, but two members – David Miles and Adam Posen – argued that more will be needed and voted for £75 billion.

This may be possible because the main fear over QE – that the new money will fuel inflation – has been judged by the Bank to be a low risk. This point was made by deputy governor and MPC member Charles Bean this week during a speech in Glasgow, when he said the influence that drove up inflation last year have been on the wane in recent months.

And for those concerned about debt, their jobs and the future, Mr Bean stated that the economy should benefit from increased spending as lower inflation means incomes are not squeezed so much.

However, he noted, government austerity measures and the burden UK consumers have in paying off their own debt mean the pace of recovery in the near future will "remain moderate by historical standards".

Posted by Paul Thacker
 

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