UK Growth Puts the Lid on QE

There were several messages from today’s Bank of England minutes, with the monetary policy committee voting unanimously for no change in policy. The first was that it will take a slowing of the economy for more quantitative easing (QE) to come back on the agenda. At a time when the Federal Reserve is on the brink of tapering its QE purchases, we may be seeing the beginning of the end of this policy.

The second message is that we should not take too much notice of the monthly single-month labour market statistics. As the minutes say: “Members did not place a great deal of weight on them: the single-month data did not, as yet, meet the statistical standards that the ONS required to qualify as a ‘National Statistic’; they were volatile, being both based on a smaller sample than the three-month headline unemployment figures and scaled up from the survey sample in a more rudimentary way; and they were subject to cohort effects.”

The third message is that the recovery is gathering strength, and this is supported by reports from the Bank of England agents. But in both cases, the Bank is keeping its feet on the ground. The minutes are here, and the agents’ report here.