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Bank set to pump £75bn into economy

Ben Chu
London Independent [1]
July 2, 2012

The Bank of England is set to pump up to £75bn of newly printed money into the ailing UK economy as fears grow that the eurozone crisis could drag Britain deeper into recession.

City analysts are expecting the Bank’s Monetary Policy Committee (MPC) to extend its £325bn Quantitative Easing programme this week. The average forecast is for another £50bn of UK sovereign bond purchases.

But several economists say that the MPC is likely to go even further at its monthly meeting on Thursday. “We are confident this will be another occasion when the Bank of England errs on the side of doing more rather than less,” said Sam Hill of RBC Capital Markets. He expects the nine-member MPC to vote to buy another £75bn in assets over the next four months.

According to Mr Hill, the MPC is likely to feel it has more room to stimulate the economy because inflation has fallen faster than many expected, with the Consumer Prices Index dropping to 2.8 per cent in May.

Full article here [1]