The prospect of higher inflation next year and forecasts that Britain will avoid falling back into a deep recession persuaded a majority of policymakers at the Bank of England against expanding its £375bn quantitative easing (QE) scheme.
According to the minutes of the monetary policy committee (MPC) meeting in November, the central bank also backed away from boosting QE after most committee members agreed the uncertain economic outlook meant banks were unlikely to pass on the funds to businesses and homeowners. The poor state of bank and building society finances was also the primary reason for rejecting a cut in base interest rates, the minutes said.
The decision not to pump more cash into the fragile economy was expected to be close after the economy bounced back in the third quarter with a 1% rise.
While the rebound was helped by several one-off factors, including the Olympics, the strength of the comeback from recession offset signs of weakness in a string of business surveys.
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