Another round of money printing may be necessary to keep the recovery on track, Bank of England policymakers have warned – Published on The Telegraph.co.uk, by Philip Aldrick, June 23, 2011.
In its most pessimistic outlook for months, the Bank’s rate-setting Monetary Policy Committee (MPC) “judged that the downside risks to the prospects for medium-term inflation had increased”, according to the minutes for this month’s meeting.
Seven members voted to hold rates at 0.5pc, with two calling for an immediate quarter-point rise to counter soaring inflation of 4.5pc – twice the MPC’s 2pc target.
The vote, and the minutes, “struck a distinctly dovish tone”, KPMG chief economist Andrew Smith said after four months in which the vote has been 6-3.
The change was caused by the departure last month of Andrew Sentance, who wanted a half-point rise. His successor, Ben Broadbent, voted for policy to remain unchanged … //
… Most MPC members feared that “the current weakness of demand growth was likely to persist for longer than previously thought”, noting “the fiscal challenges in the euro-area periphery highlighted the potential for further adverse shocks to demand”.
As a policy, QE is designed to combat a demand slump.
However, Simon Ward, Henderson’s chief economist, described the prospect of more inflation-boosting QE as “dangerous”. (full text).
2 Links on en.wikipedia:
QE2: The expression ‘QE2′ has become a “ubiquitous nickname” in 2010, usually used to refer to a second round of quantitative easing by central banks.