CITY AM SHADOW MPC

ALLISTER HEATH CITY A.M.
Growth is returning slowly to the UK economy. But the Bank will increase quantitative easing this month; it has little choice really as the markets (and the Treasury) are not ready to face any exit strategy.

SIMON WARD HENDERSON NEW STAR
Expand gilt purchases by £25bn but halve the pace to £12.5bn a month. Quantitative easing is starting to work: broad liquidity has risen by nine per cent annualised so far in 2009.

HOWARD ARCHER IHS GLOBAL INSIGHT
“Hold rates and expand QE by another £25bn. While the economy is past the worst, major obstacles remain to sustainable recovery and there are still serious concerns about bank lending.”

GEORGE BUCKLEY DEUTSCHE BANK
“Interest rates may need to be kept very low for some time. Given uncertainties about policy effectiveness and some mixed economic news, we recommend a further £25bn of asset purchases.”

GRAEME LEACH INSTITUTE OF DIRECTORS
“The transmission mechanism for QE remains uncertain but as yet broad money shows only a weak response. This will change so there is no immediate pressure to expand QE but it’s a close call.”

VICKY REDWOOD CAPITAL ECONOMICS
“The limited success of QE suggests that the MPC should use the remaining £25bn sanctioned by the chancellor, and ask permission to do more if, as looks likely, that is necessary.”

MICHAEL SAUNDERS CITIGROUP
The MPC may well vote for a tactical extension to QE in July, while seeking authorisation from the chancellor to raise QE above £150bn. I expect them to announce in August QE is being suspended.

CHARLES DUMAS LOMBARD STREET RESEARCH
Keep interest rates unchanged but we need more QE from the Monetary Policy Committee. The current fears of inflation are groundless within a practical timeframe.

TREVOR WILLIAMS LLOYDS TSB
“The bank rate should stay at 0.5 per cent and the Bank of England should pursue QE, asking for more than the £150bn already allocated as a sustainable recovery is not yet in clear view.”