Rate-setters refused to offer more aid to the UK economy today despite the latest grim set of growth forecasts from the Office for Budget Responsibility drowning in red ink.
The Bank of England’s monetary policy committee offered no surprises as it kept the scale of its money-printing programme unchanged at £375 billion and held interest rates at their current record low of 0.5%.
The decision comes a day after the Chancellor’s official fiscal watchdog admitted the economy was on course to shrink by 0.1% over 2012 and was likely to be contracting again during the current quarter.
The MPC is reluctant to sanction more quantitative easing despite the bleak picture on growth, while it assesses the impact of its Funding for Lending scheme. But the first three months of the initiative showed banks growing net lending by less than £500 million despite drawing down £4.5 billion in cheap funding from the Bank so far.
The latest snapshot of activity from Britain’s manufacturers, builders and services firms has signalled a difficult November for the economy, holding the door open to more QE if necessary.
Adding to the gloom, figures today showed the UK’s trade deficit widened from £2.5 billion to £3.6 billion during October.
