Another round of QE may be in pipeline, says deputy
Consumer confidence numbers for May were also slightly better than expected but still showed the economy mired in a downturn that has pushed it back into its second recession in two years.
Economists say that makes a strong case for the bank to add to the £325bn worth of extra cash they have pumped into the economy, although only two out of 50 in a poll believe the Bank could do so at its June 6-7 meeting.
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Hide AdStill, the polling also shows a 50 per cent chance the Bank will restart its programme of quantitative easing at some point in future, and as much as a 25 per cent chance for next week.
“We have the scope to do more asset purchases,” Mr Bean told the Eastern Daily Press.
“We will certainly do whatever we can to try and ensure that if events beyond our shores turn out badly we can minimise the impact on households and businesses over here and try and keep the economy recovering. But it will be difficult.”
That contrasted with the Bank’s chief economist Spencer Dale, who said on Wednesday more purchases may not be warranted even if the economy continues to struggle, and the bank should keep its focus on bringing down inflation. Eyes in Britain are fixed firmly on a eurozone crisis that the Government, anxious to shift the blame for the downturn away from sharp spending cuts, says has depressed already weak confidence among consumers grappling with falling real incomes and a dearth of jobs.
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Hide AdThe economy contracted by 0.3 per cent between January and March and growth in the second quarter is endangered by the mounting worries about the survival of the euro.
Mr Bean said it was reasonable to think that the recovery of the economy would be slow and interest rates were more likely to stay low than “rocket up”.
That chimed with the latest economic data and news from UK companies.
Consumer confidence in May was still weaker than a year ago and far below its average over the past four decades, a survey by GfK NOP showed.
“It is doubtful whether we will see a sustained rise in underlying confidence,” said Martin Beck, economist at Capital Econom- ics.