Bank of England not expected to make changes to it's monetary policy

It is expected that the Bank of England is not going to be changing its monetary policy despite the fact that figures have recently been released which have shown that for the third quarter in a row the economy has contracted at a faster pace than previously.

Officials from the central bank have said that they are concerned about the state of the UK economy, and are particularly aware about the shortage of credit that is available for both businesses and households. They have also said that the banking system is dysfunctional in many ways and it is limiting the effectiveness of the monetary policy commission’s policies.

Instead of relying on quantitative easing and interest rates, and the printing of money to buy bonds, the policymakers are going to be working on a new lending scheme, which they are funding with a large amount of money.

The idea behind the lending scheme is that it is going to directly tackle the credit supply problem. On Wednesday the scheme is going to open for businesses and is going to allow funding to be made available more cheaply as banks are being lent money from the government at a lower rate. The idea behind this is that the banks are going to have to lender to customers at a low rate, or they are going to have the money taken away from them.

Data that has recently been published by the Bank of England has shown that the economy is facing an immense credit challenge. Mortgage approval rates have slumped to their lowest rate in a year and a half and the amount of money being lent to businesses has also been reduced. This could explain why many businesses are unable to capitalise on the depreciation of the pound against other currencies.