Bank of England's MPC indicates QE2 is a case of if not when

The Bank of England's Monetary Policy Committee (MPC) has sent the message loud and clear that it is now a case of "when" and not "if" for a second round of quantitative easing (QE).

The change in tone of the minutes of the MPC's September meeting, published on Wednesday, reflected a growing sense that now is the time to don hard hats and brace for a second global downturn.

What clearer indication could there be of the stormy times ahead for the UK economy than a signal from the Bank that more stimulus – on top of historically low interest rates and £200bn of QE – will be needed?

Although the committee toyed with the idea of alternative stimulus measures – including cutting interest rates further, despite them having been held at just 0.5pc since March 2009 – the MPC concluded that additional QE would be the best way forward for further support.

While the MPC remains concerned about high inflation – the consumer prices index came in at 4.5pc in August, more than double the 2pc target – its attention has shifted back to growth.

"Despite the fact that inflation is forecast to top 5pc later in the year, MPC members are more concerned about steering monetary policy in a way that the economic recovery remains afloat," said Nida Ali, economic adviser to the Ernst & Young ITEM Club. more