MPC pauses – but not for long

The Monetary Policy Committee voted to pause its programme of quantitative easing (QE) at its latest meeting. But both the Inflation Report - showing inflation undershooting its target further ahead - and various comments by MPC members have left the door wide open to a further extension of the asset purchases later this year. (See Chart.) We still think that the economic recovery will disappoint and that inflation will soon start to fall sharply, prompting the MPC to increase QE before long.