The Bank of England is likely to keep its bond plan on hold for the next few months as inflation prevents officials from adding stimulus, Confederation of British Industry Director General Richard Lambert said.
Third-quarter economic growth numbers will probably be “okay” and the central bank is likely to increase its prediction for inflation in its quarterly report in November, weakening the case for more asset purchases, Lambert said at an event in London today.
The Bank of England’s next quarterly forecasts “might show inflation a little higher than it was likely to be in the last inflation report, which would make it harder for any bold efforts to loosen monetary policy even further,” Lambert said. “Were they to do that they would probably want to wait a bit longer to see what happens over the winter months.”
The Monetary Policy Committee last week left its emergency bond-purchase plan unchanged at 200 billion pounds ($319 billion). A split has emerged between policy maker Adam Posen, who advocates the need for more purchases to boost slowing economic growth, and Andrew Sentance, who argues interest rates should be increased to combat inflation.
“The third-quarter numbers and the future inflation indicators make it less rather than more likely that we’ll see any more” stimulus, Lambert said. He was a Bank of England policy maker between 2003 and 2006 and was editor of the Financial Times newspaper for 10 years before that.
Britain’s economy expanded at the fastest pace in nine years in the three months through June. The Office for National Statistics will release third-quarter gross domestic product data on Oct. 26 and the central bank will publish its new inflation and growth forecasts on Nov. 10.
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