THE Bank of England's Monetary Policy Committee (MPC) held off from providing further stimulus to the struggling UK economy yesterday, even though a raft of indicators have raised fears of renewed contraction in output as early as the current quarter.

Economists predicted further monetary stimulus was likely to be needed in the near term, after the MPC voted to hold UK base rates at a record low of 0.5% and maintain the scale of its quantitative easing (QE) programme at £375 billion at the end of its latest two-day meeting.

Howard Archer, chief UK economist at consultancy IHS Global Insight, said the decision "may very well have followed a very close vote" by the MPC.

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QE is aimed at stimulating the economy by boosting money supply through the purchase of Government and corporate bonds, funded by the issuance of central bank reserves.

Mr Archer said: "We are doubtful that the decision marks the end of quantitative easing given that recovery currently looks fragile, feeble and far from guaranteed. Indeed we expect another, and likely final, £50bn of QE to be enacted in the early months of 2013. Furthermore, we would not rule out further QE as soon as December if data and surveys over the next few weeks increasingly point to renewed GDP (gross domestic product) contraction in the fourth quarter."

Stephen Boyle, head of group economics at Royal Bank of Scotland, said: "Given it currently feels as if the MPC is unlikely to change rates until most of us are well into our retirement, focus on monetary policy is almost exclusively on whether or not the Bank of England decides to open her large cheque book."

Mr Boyle believed the 1% quarter-on-quarter bounce in UK GDP in the three months to September, which was reported last month by the Office of National Statistics and followed three consecutive quarters of decline, "probably tipped the balance for the MPC deciding not to loosen policy further ... for now".

However, he added: "With signs that the economy is slowing down, one shouldn't rule out further QE in the future."

Vicky Redwood, chief UK economist at consultancy Capital Economics, said: "The MPC's decision to leave policy on hold ... would not have been an easy one and the vote could have been quite close.

"We think that more policy stimulus will be required in the coming months – the question is whether the committee feels it has the tools to deliver it."