03 February 2012 at 10:31 GMT
Another positive surprise in UK data land today, as the Purchasing Manager's Index, (PMI), for the Services sector of the economy came out at 56.0, surging past expectations for 53.3. Given this sector accounts for 75 percent of the UK economoy and that the Manufacturing Sector PMI,
released on Wednesday, also exceeded expectations, one might even be forgiven for feeling the first stirrings of hope for growth in 2012 in the UK.
With the US showing signs of life and the Eurozone crisis seemingly contained as of the near future, one certainly begins to question whether the Bank of England Monetary Policy Committee will rush into more Quantitaive Easing, (QE), when it meets next Wednesday and Thursday (February 8 and 9).
The last £75bn tranche of QE was due to be completed this week and speculation has been for more-to be announced either next week or at the March meeting.
January meeting minutes contain cautionary wording
The minutes of the January meeting contained some, (admittedly Delphic), sentences that could lead one to believe that further QE is indeed not a done deal, with the suggestion being the MPC would like to see actual confirmation that inflation is falling, as it has long predicted. Add
into the mix the fact that the European Central Bank's injections of liquidity into the banking system have been extremely successful in under-pinning the EU periphery's bond markets, (and really amount to QE in a pretty thin disguise), and the anticpated drag on the UK economy from the Eurozone seems
to be diminishing.
I'm going out on a limb and saying no extra QE will be announced next week and that the chances for March have diminished to 40/60 against.