The Bank of England maintained its target for asset purchases as policy makers gauged the capacity of their second round of stimulus to ward off the danger posed by Europe’s debt crisis.
The nine-member Monetary Policy Committee led by Governor Mervyn King held the ceiling for so-called quantitative easing at 275 billion pounds ($438 billion), as forecast by all 38 economists in a Bloomberg News survey. The bank, which expanded QE by 75 billion pounds last month, said the current purchases will take another three months to complete and the “scale of the program will be kept under review.”
Europe’s debt turmoil has spread to Italy, further threatening Britain’s recovery, and the European Commission said today there’s a risk of a contraction in the U.K. economy in “at least one of the next few quarters.” The Bank of England may lower growth projections in its Inflation Report next week, which King will present at a press conference.
