"Meanwhile, the economy is likely to emerge from a triple dip, starting a modest but sustained recovery"
- Joost Beaumont, an economist at ABN Amro Holding NV
During its monthly policy meeting, the Bank of England decided to keep its stimulus programme on hold, even despite a new remit that gives it extra leeway to disregard above-target inflation. The Monetary Policy Committee led by Governor Mervyn King left the target for asset purchases at 375 billion pounds ($565 billion), meeting analysts' expectations. Earlier this year, King was trying to push for a 25 billion-pound increase. At the same time, the BoE also decided to keep interest rates unchanged at 0.5%, where it has been since March 2009. Britain's economy is showing limited signs that it has gathered momentum after shrinking in the fourth quarter.
Also Thursday, a common report by the Markit and CIPS, showed that the U.K. dominant service sector climbed to 52.4 in March from 51.8 in February. Even despite a slowdown in manufacturing and construction sectors, the significant improvement in the service sector points to 0.1% economic growth in the first three months of 2013.
"Inflation is likely to remain at elevated levels in coming months," said Joost Beaumont, an economist at ABN Amro Holding NV in Amsterdam, who forecasts no further QE. "Meanwhile, the economy is likely to emerge from a triple dip, starting a modest but sustained recovery."
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