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| Bank of England keeps interest rates and QE unchanged | Bank of England keeps interest rates and QE unchanged |
| (about 1 hour later) | |
| The Bank of England has kept its stimulus programme of quantitative easing (QE) unchanged and also held interest rates at 0.5%. | The Bank of England has kept its stimulus programme of quantitative easing (QE) unchanged and also held interest rates at 0.5%. |
| The decision had been widely predicted, with most analysts not expecting any change in policy until the new Bank governor, Mark Carney, arrives in July. | The decision had been widely predicted, with most analysts not expecting any change in policy until the new Bank governor, Mark Carney, arrives in July. |
| The first quarter GDP figures, showing growth of 0.3%, were also felt to have reduced the need for more QE. | The first quarter GDP figures, showing growth of 0.3%, were also felt to have reduced the need for more QE. |
| In addition, recent data has suggested the UK economy is picking up. | In addition, recent data has suggested the UK economy is picking up. |
| Figures from the Office for National Statistics released earlier on Thursday, said industrial output rose 0.7% in March from February, a bigger increase than forecast. Manufacturing output rose by 1.1%. | Figures from the Office for National Statistics released earlier on Thursday, said industrial output rose 0.7% in March from February, a bigger increase than forecast. Manufacturing output rose by 1.1%. |
| In addition, recent sector surveys have indicated that conditions improved last month in the service, manufacturing and construction sectors. | In addition, recent sector surveys have indicated that conditions improved last month in the service, manufacturing and construction sectors. |
| The Bank's Monetary Policy Committee (MPC) has been split in recent months over whether to increase its QE programme from the current level of £375bn. | |
| Three members - including governor Sir Mervyn King - of the nine member MPC have voted for an extra £25bn of QE at the past few meetings. | Three members - including governor Sir Mervyn King - of the nine member MPC have voted for an extra £25bn of QE at the past few meetings. |
| Change | |
| In March's Budget, the Bank of England's remit was altered by Chancellor George Osborne, allowing it to consider using more unconventional monetary tools to boost the economy. | |
| Fund management firm Investec said that it expected more QE to be introduced once the new governor took up his role. | |
| "We suspect following the arrival of the new governor Mark Carney we will see a sustained push to try and achieve a step-up in growth... in the shape of £75bn of further QE purchases, sanctioned in two tranches from August onwards," Investec said. | |
| But the chief economist at the British Chambers of Commerce, David Kern, said Mr Carney should not be tempted to do this. | |
| "Following the changes in the MPC's remit announced in the Budget, it is worrying that the demand for more QE could be part of a wider policy shift where higher inflation and a weaker pound are tolerable," he said. | |
| "Instead, incoming governor Mark Carney should make better use of the existing QE programme, and use measures other than QE alone to support a revival of business lending." | |
| Last month, the Bank of England announced plans to expand its Funding for Lending Scheme, which is designed to improve lending to businesses and households. | |
| Some believe the FLS programme could be a more effective way of boosting the economy than QE. |