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Bank of England agrees to maintain quantitative easing programme

Bank of England minutes from the September meeting have been released today showing that the vast majority of members voted in favour of maintaining the quantitative easing programme at £175 billion with the potential to increase this in due course if required. This move has been taken well by the currency markets where sterling has moved higher in early trading but there is still some concern about the UK economy and the speed of recovery.

The minutes show that nine members of the MPC aired concerns of possible "false dawns" with regards to the economy, citing weakness in the banking system and an inability for some companies to raise much-needed finance. This ties in with the recent fund-raising activities on the UK stock market, which many believe will continue for some time, although how long investors will accept the excuse of "strengthening the balance sheet" remains to be seen.

On the interest rate front it was revealed that while interest rates will not move lower in the short term, and are unlikely to go be reduced in this economic cycle, they are also unlikely to rise in the immediate future. In essence, the Bank of England is still cautious about the strength and depth of UK economic recovery even though the UK stock market would appear to indicate a more positive outlook in the short to medium term.

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