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October 22, 2009

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BOE members united in decision to hold rates

BANK of England policy makers were unanimous in their decision this month not to change interest rates or their money supply program, citing improvements in markets and economic data, the meeting's minutes showed yesterday.

The minutes of the October 7-8 meeting - when rates were left at a historic low of 0.5 percent and the asset purchase scheme was kept going at its current size - revealed differences of views among the nine members of the monetary policy committee on the inflation outlook.

But they added that all members "agreed that recent developments were not sufficiently compelling to justify revising the target level of asset purchases that had been agreed at the August meeting or to change the level of Bank Rate at this meeting."

The decision not to extend the so-called quantitative easing program - buying assets from banks to boost the money supply - beyond the current 175 billion pounds (US$290 billion) had been widely anticipated by economists, who expected the bank to wait until November's meeting before making any changes.

The bank itself noted that November's new growth and inflation forecasts would allow for a fuller discussion at that gathering.

"The odds currently seem to favor the MPC bringing its quantitative easing program to at least a temporary end given the economy's likely return to growth in the third quarter," said IHS Global Insight economist Howard Archer, while also noting a 25 billion pound boost could not be ruled out.

The minutes mentioned recent economic developments had "generally been positive."


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