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MPC 'under pressure to do more'

BOE Monetary Policy Committee is under pressure

The Bank of England's Monetary Policy Committee (MPC) is coming under pressure to do more to boost the UK economy, experts have noted.

According to foreign exchange specialist HiFX, economic data for the year to date has been at the "lower end of expectations".

This, it said, means the MPC is facing growing calls to take tougher measures in an attempt to fuel growth in the UK's gross domestic product.

Andy Scott, a currency expert at HiFX, stated that members of the MPC were unanimous in their decision to keep the quantitative easing programme on hold and to freeze interest rates at 0.5 per cent during their most recent meeting.

Nevertheless, he said it is likely there will be "increased discussion" among them in the next few weeks regarding what the Bank of England "can and should do to help the struggling economy".

Mr Scott noted that the fact inflation is still above the government's two per cent target means there is "currently room to expand policy".

However, he suggested the Bank of England may be able to "ride the improvement in economic sentiment" created by the Federal Reserve's announcement of an open ended quantitative easing programme and the European Central Bank's "pledge of unlimited intervention".

Skandia is relatively optimistic regarding the UK's economic outlook in comparison with HiFX. Indeed, the organisation said the country's economy appears to be "on the road to recovery" if the latest indicators are to be believed.

Rupert Watson, head of asset allocation at Skandia, said the latest retail sales data was more positive than many had expected, while conditions in the labour market are improving too.

This, he said, suggests gross domestic product in the UK is likely to increase throughout the coming months, despite the fact the economy continues to face "considerable headwinds" including weakness in the eurozone and hikes in energy prices.

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