BOE May Keep Stimulus on Hold as Mixed Data Preserves Split

The Bank of England will probably keep its asset-purchase program at 200 billion pounds ($314 billion) next week as mixed economic data preserves the divide among officials on whether to tighten monetary policy.

Policy makers will leave the size of the bank’s bond holdings unchanged on Dec. 9, according to all 34 economists in a Bloomberg News survey. They will also keep the benchmark interest rate at a record low of 0.5 percent, all 58 economists in a separate survey said.

While U.K. manufacturing growth accelerated to the fastest pace in 16 years in November and services expansion stayed close to a four-month high, construction remained near an eight-month low, surveys showed this week. The combination of faster-than- targeted inflation and government-spending cuts means the bank may wait until 2012 before changing policy, Investec Securities Chief Economist Philip Shaw said.

“There seems to be very little motivation on the committee to change the policy stance one way or another,” London-based Shaw said today. “On one side, the recovery is not yet self- supporting, but any inclination to ease again is being dampened by the high rates of inflation. It does seem that the majority of the committee is quite happy to sit on their hands.”

The Bank of England is scheduled to announce its decision at 12 p.m. on Dec. 9 in London.

To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

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