SMPC supports continued quantitative easing - July 2009

Keep bank rate the same and continue with QE, argue SMPC

In its latest poll, the IEA Shadow Monetary Policy Committee (SMPC) again voted unanimously to leave Bank Rate at 0.5% when the Bank of England’s rate setters meet on 9th July. The unanimous SMPC vote reflected the belief that there was little case for a rate increase in the near future – even if one or two members were becoming slightly more trigger happy - combined with the view that 0.5% was close to the effective lower limit where the official interest rate was concerned. There was a widespread feeling among the members of the IEA’s shadow committee that Quantitative Easing (QE) was the only effective monetary policy instrument presently available to the authorities. Several committee members believed that the present schedule of gilt purchases should be extended. Some members thought that an additional £100bn to £150bn of debt re-purchases was required once the current package had run its course.

The SMPC poll was largely carried out before the UK Office for National Statistics (ONS) announced a substantial downwards revision to its previous estimate of UK GDP in the first quarter of 2009, on Tuesday 30th June. The lower starting base tempered even further the modest hopes engendere