18 February 2010

Pound rises on MPC minutes

The pound rose against the euro after the Monetary Policy Committee of the Bank of England released its latest meeting minutes.

It was shown that all nine members of the MPC had voted against increasing quantitative easing. This did surprise some economists but it was suggested that the committee's unanimity was only just reached.

Apparently they were worried that if they increased QE, the public would get a negative impression on how they are dealing with inflation.

Inflation was 3.5% in January, much too high when you consider the government target is 2%. Yet in the medium term it is forecast to be 'below target' - something which would actually warrant more asset-buying to drive it nearer to target.

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