London - XINHUA
The decision by the Bank of England (BoE)\'s Monetary Policy Committee (MPC) against a further round of Quantitative Easing (QE) program was a sign that the British economy is on the mend and does not need a stimulus at this moment, experts said here on Friday. Th MPC met Thursday for the last time under outgoing BoE governor Mervyn King, who will step down from the post after 10 years on July 1. He will be replaced by current Bank of Canada governor Mark Carney. The MPC decided not to extend the QE program from its current 375 billion pounds (about 581 billion U.S. dollars). \"It is not too surprising given the fact that the British economy is in a better condition now than it was when they last extended QE, which was back in October 2012, when they last bought gilts,\" Deutsche Bank chief UK economist George Buckley told Xinhua. \"I don\'t think they will need to do any more in terms of QE guidance, unless the economy disappoints again. If inflation falls in the second half of this year it wil give the bank more room for maneuver if they need it, should growth disappoint,\" he said. Buckley said that the incoming governor Carney might consider an extended QE program at his first MPC meeting at the beginning of July, but he would need to persuade others on the committee in order to do so. Howard Archer, chief UK economist at IHS Global Insight, also said: \"We still think it is more likely than not that the BOE will take further simulative action over the coming months, most likely in the form of a further 25 billion pounds of QE sometime in the third quarter.\" Archer said it was likely that Carney would be keen to try and build up escape velocity from the British economy\'s extended softness and would want to establish his presence in his new role. This, together with a desire to try and counter recently rising bond yields, may also encourage the BOE to go for more QE, said Archer. But Archer added he did not expect the BOE under Carney to take interest rates below the current record low level of 0.5 percent. The positive data from the Purchase Manager Indices for services last month indicated an increase in growth in the British economy. While the news is heartening, economists have warned that the growth is still far off the trend growth of 2-2.5 percent GDP per annum, and also less than the rate of growth seen after previous deep recessions. However, the positive growth is an improvement on the final quarter of 2012 when the British economy shrank by 0.3 percent quarter on quarter. The growth is also an improvement on the forecasts of some commentators that 2013 Q1 would see further contraction in the economy, resulting in an historic third recession in succession since the global financial crisis of 2008.