There had not been enough clear evidence, the Committee said, to suggest that the £125 billion target should be changed at this meeting. In the short term therefore, asset purchases would continue over the month ahead as they were still short of the target level of £125 billion. The Committee would keep the scale of the programme under review, and the preparation of the August Inflation Report offered an opportunity to reassess the stock of asset purchases in the light of a fully updated assessment of the outlook for inflation and growth at its next meeting.
RLAM's Economist, Ian Kernohan, commented:"As far as the next step in the QE programme is concerned, today's minutes did not really add much to the debate and so the market will now turn its attention to next month's inflation report, when more information will be available, notably a comprehensive set of monetary data.
It is the stock rather than the flow of QE purchases which provides the monetary stimulus and at 8% of GDP, £125bn is a considerable sum. I anticipate that the inflation projection in next month's Inflation Report will show CPI close to target, assuming unchanged policy; in other words, the lagged effect of 0.5% bank rate and £125bn of QE will be enough to bring inflation back to target two years from now. The Bank is no longer in fire fighting mode; we're back to a more nuanced touch on tiller approach to monetary policy."
