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Thursday, 5 November 2009

MPC increase quantitative easing

by Chris Fletcher, Deputy Chief Exec.

The Bank of England's Monetary Policy Committee has decided to extend its policy of quantitative easing by £25bn (to take the scale of the cash injection to £200bn) and hold interest rates at 0.5%.

There has been a drive for an increase in quantitative easing. This is the eighth month that interest rates have been held at 0.5%. There are increasing signs of optimism, but there still needs to be further action before we see the foundations of a real recovery.

The jury is still out on whether the medicine has worked. Businesses are still saying that there is a blockage in the credit system which is putting a major brake on financial stimulus. Therefore we are pleased that they have taken heed of what businesses have said and increased quantitative easing.

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