Bank holds back from firing up economy

The Bank of England marked the first anniversary of quantitative easing by leaving the programme unchanged at 200bn and holding borrowing costs at their 0.5 per cent all-time low.

The Monetary Policy Committee’s “wait and see” stance comes after a month of mixed signals as the UK crawls out of recession.

Figures last week showed the economy growing at a faster pace than first thought in the last quarter of 2009, but the 0.3 per cent advance sparked little cheer.

Recent surveys showed manufacturing and services activity picking up pace and consumer confidence at its highest level for two years, but VAT rises and snow have hit retailers.

House prices also registered their first fall in nearly a year during February, according to house price surveys from Halifax and Nationwide. Members of the Monetary Policy Committee have dropped hints that more quantitative easing could be in the offing if the recovery fails to gain traction and the threat of a “double-dip” recession looms.

Capital Economics’ senior economist Vicky Redwood said that without quantitative easing the UK could still be in recession, although the policy had not worked well enough to kick-start a strong recovery. “We doubt that the 200bn undertaken so far will be enough,” she said.