The Bank of England Monetary Policy Committee voted unanimously to hold the Bank Rate at 0.5% and to keep the level of quantitative easing at £200 billion.
The MPC is engaged in a difficult juggling act. On the one hand GDP and money supply figures argue that quantitative easing should be extended, but on the other hand the increase in inflation has exceeded expectations and suggests a need for caution. Our view remains that until money supply growth strengthens further, sustainable recovery will be in doubt.
A double dip or even triple tumble recession remains a serious possibility. We’ve experienced a very abnormal recession and we shouldn’t be in the least bit surprised if the recovery is abnormal as well.
The business finance team at Enable Finance are still concerned that 2010 will be a bumpy ride form many small to medium sized businesses and agree that economic recovery is still fragile.