The Bank of England held off of utilising more quantitative easing today under renewed enthusiasm about the current direction of the UK economy. The UK has avoided a triple dip recession during the first quarter of this year and there have been encouraging signs of life in the economy.
The base rate of interest was also held at 0.5 per cent, which is the level it has been at since March 2009.
According the ONS (Office of National Statistics) industrial production climbed by 0.7 per cent in March, which is an encouraging yet small sign of a possible return to growth in the UK.
The vote on QE was taken by the Monetary Policy Committee before it was clear that the UK had managed to escape a triple dip recession, but they felt that the signs were strong enough to opt out of injection more cash into the economy. According to the minutes of the meeting Sir Mervyn King, David Miles and Paul Fisher voted in favour of injecting more cash but were overruled.
Some economists aren’t convinced that a few small signs of improvement signal that the hard times are over, but hopefully they are proven wrong.
Phillip Shaw from Investec said that: ‘The 0.3 per cent quarterly increase in GDP in the first quarter, while arguably not making a material change to the outlook, has taken some of the pressure away from the committee to do something now on the economy.’