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The Bank of England refrained from unleashing further emergency support for the economy this week. Its Monetary Policy Committee (MPC) has held interest rates at 0.5%, maintaining rates at this record low since March 2009. It also held its quantitative easing (QE) programme at £375bn as it works through £50bn of asset purchases announced in July.
Many economists have predicted a further QE boost in November after the current run of asset purchases is completed. The Bank will also want more time to assess the impact of its "Funding for Lending" scheme launched in July before pulling other economic levers. Whilst the MPC has considered cutting rates below the current level, it continues for now to favour QE as its response of choice despite mixed views as to whether it is counter-productive.
The Bank may soon be forced to provide greater support if the UK fails to emerge from recession in this quarter or if the eurozone crisis worsens. The MPC and the government will need to play their part by also considering other less conventional measures to boost growth and business lending.
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