Bank of England's MPC says eurozone threat has risen

The Bank of England
Image caption The Bank of England says the threat from the eurozone has grown

The Bank of England's Monetary Policy Committee (MPC) has said the danger for the UK from the eurozone crisis has risen.

But minutes from the MPC's meeting earlier this month said that now was not the time to add further stimulus to the economy.

All nine members of the MPC backed maintaining the target level of quantitative easing (QE) at £275bn.

They also unanimously agreed to keep interest rates at 0.5%.

In October, the MPC announced another £75bn of QE.

The November minutes said: "While the worst risks had not so far crystallised, the threat of their doing so had increased, exacerbating the already severe strains in bank funding markets and financial markets more generally."

But the committee did not think now was the time to increase monetary stimulus by injecting more money into the system.

The QE asset buying purchases will be completed in February, and members were split on whether or not more would be needed after that.

"Some members noted that the balance of risks to inflation in the November Inflation Report projections meant that a further expansion of the asset purchase programme might well become warranted in due course.

"Some other members judged that the risks to inflation around the target were more balanced."

The minutes noted that the economy was likely to come to a halt in the last three months of the year.

They said third-quarter growth of 0.5% overstated the strength of the economy, and early indicators pointed to stagnation in the fourth quarter.

Philip Shaw, chief economist at Investec, said the report was much as expected: "No huge surprises from the minutes.

"Other than that we remain of the view that given a very subdued and uncertain economic outlook the committee is likely to sanction a further £100bn of additional QE over the course of 2012."

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