London - AFP
The Bank of England was expected to announce a pause to its economic stimulus programme on Thursday after recent official data showed Britain had exited a deep recession in the third quarter of 2012. Until recently, many analysts had expected that the British central bank would announce an increase to its stimulus, or quantitative easing policy, following its upcoming monetary policy meeting to boost lending and economic activity. But after data showing that Britain has escaped its longest double-dip recession since the 1950s, most commentators now expect that the Bank of England (BoE) will sit tight before pumping more stimulus cash into the economy. The BoE\'s Monetary Policy Committee (MPC) has injected £375 billion ($600 billion, 468 billion euros) of new cash into the economy since March 2009, in a bid to stimulate growth -- including £50 billion between July and November. \"We judge that on balance the MPC is most likely to remain on hold, maintaining the quantitative easing (QE) target at £375 billion and effectively entering a pause in the programme,\" said Victoria Clarke at Investec bank. \"Nevertheless this is going to be a tough call for the committee\" with British growth remaining weak. Under quantitative easing (QE), the Bank of England creates cash that is used to purchase assets such as government and corporate bonds with the aim of increasing lending by retail banks and boosting economic activity. However Britain\'s major banks, battling against falling profits and heavy fines, remain reluctant to lend to many individuals and businesses. The BoE was on Thursday also forecast to announce that it was maintaining its key interest rate at a record-low level of 0.50 percent, where it has stood since March 2009. British gross domestic product (GDP) rallied by 1.0 percent in the third quarter, or three months to September, after output had contracted for the previous three quarters, data showed last month. However, growth turned positive on one-off factors, including the London 2012 Olympic Games and rebounding activity after an extra public holiday for Queen Elizabeth II\'s Diamond Jubilee in the second quarter. Adding to the unease, a stream of poor data this week has prompted fresh worries about the economic outlook, analysts said. Figures for example showed British industrial output tumbled by 1.7 percent in September from the August level -- far worse than market expectations for a small drop of 0.4 percent. Retail sales meanwhile dipped by 0.1 percent in October from a year earlier, an industry survey from the British Retail Consortium revealed on Tuesday. Elsewhere, the nation\'s house prices slid 0.7 percent in October, falling for the fourth month in a row as the weak economy weighed on the property market, according to a survey from home-loans provider Halifax. \"If we were in any doubt about the fragility of the recovery... (recent) data should have put the record straight,\" said Deutsche Bank\'s chief UK economist George Buckley, who predicted no change in BoE policy this month. \"The combination of weaker retail sales growth, a decline in house prices and a sharp fall in industrial production come on top of the disappointing\" services sector data. The latest CIPS/Markit purchasing managers\' index (PMI) for the services sector showed output slowed sharply in October to 50.6 from 52.2 in September. A level above 50 indicates that the sector is expanding.