Bank of England Holds Off From Additional Monetary Stimulus Measures
The Bank of England's MPC (Monetary Policy Committee) has decided it will not be extending its QE (Quantitative Easing) program and pumping more money into the fragile UK economy. The decision was aligned with market expectations, but the consensus is that the economy may need more stimulus over the coming months. The BOE has held the quantitative easing amount at £375 billion.
This decision to hold comes after the latest data showed the economy had grown at a greater-than-anticipated 1% level from July to September. The BOE use quantitative easing measures in order to help revive spending from consumers, along with associated economic growth. The bank prints money which is subsequently used to purchase government bonds, in order to stimulate the nations fragile economy.
The MPC has likewise decided to hold interest rates at the current 0.5% level, which was set in March 2009 and is a record low. This decision comes after robust UK Q3 growth figures and will have therefore been in-line with broad based analyst expectations. Nonetheless, the GBP/USD (pound/dollar) currency pair rallied back to the key 1.60 level after the BOE decision. The pair had earlier dropped to a 1.5929 low in early European trading as the dollar gained across the board. The UK FTSE 100 share index closed down -0.27% on the day at 5776.05 with concerns around America's forthcoming fiscal cliff hitting financial markets.