Monetary Policy Committee unanimous in rate and QE decision

The Bank of England’s Monetary Policy Committee “unanimously” agreed to hold the base rate at 0.5% in December’s meeting.

The committee were also unanimous in agreeing to hold the asset purchase scheme at it’s current £275 billion level.

According to the minutes, policy was set to meet the inflation target of 2% in the medium term.

“Overall, the committee judged there had been little change to the balance of risks to UK activity and inflation as a result of developments during the month,” the minutes reveal.

“Against that background, the committee agreed that a decision to change policy was not warranted at this meeting.”

The committee says current inflation rate was likely to “fall sharply in the first part of 2012” as the impact of a higher VAT rate, higher energy and import prices dissipated.

The committee says it was difficult to increase the monthly rate of purchases because of “market capacity”.

Ahead of the European leaders meeting, the committee warned of the threat to the UK posed by the “substantial challenges faced by the euro area”.

“The worst risks had not so far crystallised, but the possibility of their doing so was reflected in continuing strains in bank funding markets and volatility in financial markets more generally,” according to the committee.

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