The Bank of England’s Monetary Policy Committee (MPC) collectively choosing to abort UK’s asset purchase programme might have generated Utopian trust, caution analysts.
According to Senior analyst at Caxton FX, Duncan Higgins, the MPC was probably worried that any additional extension to quantative easing (QE) could have a damaging effect on the already mounting inflation. Further, the MPC’s decision seemed to tell markets that the Bank might have suspended quantative easing (QE) till future data remains favourable.
Higgins claimed that any disputes supporting further extension of QE would have been extinguished, thanks to the present inflation which stood at 3.5%, much above the Bank’s target of 2%.
The MPC’s decision has had a positive effect on the volume of Britons claiming unemployment assistance. In January, this number had witnessed an alarming increase with 23,500 additional people claiming the benefit. The stable general unemployment rate of 7.8 percent, however, spells consolidation.
Higgins stated that the unacceptable claimant count had led to the pound plunging sharply. He added that the pound had evened out with the euro later and stayed at around 0.2% down against the dollar, off its intra-day lows.
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