THE Monetary Policy Committee held UK base rates at their record low of 0.5% and maintained its quantitative easing programme at £375 billion, as Bank of England Governor Sir Mervyn King chaired his final MPC meeting.
Minutes of recent MPC meetings have shown Sir Mervyn, who steps down as Governor on June 30 and will be succeeded by former Bank of Canada Governor Mark Carney, pushing for a further £25bn rise in QE since February. Minutes of yesterday's MPC meeting will be published on June 19.
QE is aimed at stimulating activity by boosting money supply through the purchase of Government and corporate bonds using central bank reserves.
Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "While the Monetary Policy Committee hopefully gave Sir Mervyn King a nice leaving present, this did not include the further monetary stimulus he has been asking for since February.
"In fact, a recent stream of improved data and surveys have suggested the UK economy may finally be gaining a firmer footing and could even expand at a faster rate in the second quarter than the 0.3% quarter-on-quarter GDP (gross domestic product) growth achieved in the first quarter.
"This has alleviated the need for any further stimulus from the Bank of England in the near term at least, and eased pressure on Mark Carney to act as soon as he takes over as Governor."
Stephen Boyle, head of group economics at Royal Bank of Scotland, said: "May's bounce in manufacturing and services activity squashed any chance of the MPC shifting policy levers. The question is whether this new momentum is sustainable, not least given continuing problems in the eurozone. If so, the job of getting the economy back to 'escape velocity' for Mark Carney will be a lot easier."
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