Wednesday, December 23, 2009
MPC stresses the uncertainties
Posted by David Smith at 09:45 AM
Category: Thoughts and responses

Nothing much happened at the Bank of England's monetary policy committee (MPC) meeting earlier this month, Bank rate being left unchanged at 0.5% and the 200 billion programme of quantitative easing being maintained. Members noted that the flow of activity data is mixed and that there is uncertainty about how much of the VAT reversal is passed on in January. That will determine whether Mervyn King has to write another open letter to explain why inflation has topped 3%.

The big disappointment is the money supply, which remains weak. Does that argue for more quantitative easing or a decision to suspend it because it isn't working? We will not know until February. The minutes are here. Meanwhile, the British Bankers' Association said mortgage approvals rose by more than 2,000 to a two-year high of 44,713.