By ADRIAN LOWCOCK 24/12/2009
The minutes of the Monetary Policy Committee (MPC) meeting held on the 10th December were published yesterday.
The committee voted unanimously to maintain interest rates at 0.5% and extending the Quantitative Easing (QE) program by £25 billion bringing the total to £200 billion. The benefits of continuing with the policy outweighed any deviation as there was a lack of significant news in November.
Inflation
The MPC expects inflation to continue to rise in November and predicted the Consumer Price Index (CPI) to reach 1.9% for the month. The committee believes CPI will continue to rise over the coming months which is in-line with our view there will be an inflation spike at the start of 2010 before inflationary pressures ease.
UK Economy still in recession
The third quarter Gross Domestic Product (GDP) figures have been revised up to -0.3% indicating that the UK was still in recession at the end of September. Whilst the MPC expect further upward revision of the figures it is unlikely that it will turn positive. However, the MPC did see greater momentum ahead as declines in consumption and investment stabilising.
Employment remain resilient
Both the official and survey data indicated that the labour market has so far remained more resilient than many had expected. With business optimism recovering this trend could be sustainable.
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