Minutes of the Bank of England’s December meeting have been released today and have revealed that the Monetary Policy Committee (MPC) voted unanimously this month to keep interest rates at the historic low of 0.5%.
Furthermore, the Bank also opted to leave its quantitative easing (QE) programme unchanged at £200 billion.
In November, the MPC extended its existing £175 billion QE programme by £25 billion, this decision, however, was not unanimous.
Today, however, the Daily Mail has reported that the Bank of England is set to extend its QE scheme by as much as £25 billion next year.
QE, also known as printing money, is a process whereby the Treasury injects funds into the financial system to ease pressure on banks by giving them extra capital.
However, according to analysts, the minutes reiterate their belief that the Committee is unlikely to make any changes to monetary policy until February 2010.
According to Howard Archer, chief UK and European economist at IHS Global Insight, “The MPC is likely to sit tight until February when it will have both the fourth-quarter GDP data available as well as the Bank of England’s new GDP and consumer price inflation forecasts.”
Yesterday, the Office for National Statistics (ONS) revealed that the UK economy contracted by 0.2% in the July to September period - rather than the 0.3% previously reported and the 0.4% estimated in October.
However, the revised figures still mean it is the first time the UK has endured six consecutive quarters without growth - the first time since the ONS began gathering the data in 1955.
As a result, Britain is the only G20 country still in recession.
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