"Most members agreed that developments on the month had done little to alter the balance of arguments between maintaining and increasing the size of the monetary stimulus"
- BoE Monetary Policy Committee
The U.K. economy is expected to shrink in the last quarter of 2012, while the inflation rate will exceed a 2% target level, the Bank of England policymakers said on Wednesday. Despite the fact, the economy emerged from its double dip recession, as nation's GDP expanded by 1.0% in the third quarter, however, the recovery was only temporary and provided by the Olympics, so the U.K. economy is potentially on course to shrink by 0.1% in the final three months. Moreover, the BoE Monetary Policy Committee decided not to expand its stimulus programme, with only one member voting for the another expansion of the asset purchase programme, saying additional 25 billion are needed to be injected into the economy.
"Most members agreed that developments on the month had done little to alter the balance of arguments between maintaining and increasing the size of the monetary stimulus," the minutes said.
"The committee's comments suggest that more QE is not imminent. It noted that risks from the euro area seemed less pressing and that inflation was likely to remain above its target over the next year or so. But the MPC also gave the impression that it would not take much to tip the balance back in favour of more purchases," said Vicky Redwood, UK economist at Capital Economics.
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