A New Credit Program Shows Results, U.K. Keeps Stimulus on Hold

“Bank of England policy makers refrained from adding further stimulus to the U.K. economy today after their new credit-boosting program showed signs of success.

The nine-member Monetary Policy Committee led by Governor Mervyn King kept the target for quantitative easing at 375 billion pounds ($602 billion), in line with the forecast of all 39 economists in a Bloomberg News survey. They also held the key interest rate at a record low of 0.5 percent.

While the bank’s five-month-old Funding for Lending Scheme is starting to loosen credit conditions, the economy remains at risk of succumbing to a renewed recession. That’s left policy makers weighing signs of strength against threats from the euro crisis and Prime MinisterDavid Cameron’s austerity drive, the deepest since World War II.

“Most MPC members seemingly believe that there is currently not a compelling case for more QE, for now at least,” said Howard Archer, an economist at IHS Global Insight in London. “With the economy likely to continue to struggle to generate significant, sustainable growth, we expect the Bank of England to eventually give the economy a further helping hand.”

The European Central Bank in Frankfurt kept its benchmark rate at a record low of 0.75 percent today, as predicted by 50 out of 55 economists in a Bloomberg survey. The deposit and marginal lending rates were also unchanged at 0 percent and 1.5 percent, respectively….”

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