BOE Expected to Follow Fed With More Stimulus

19-Sep (Wall Street Journal) — The Bank of England is expected to follow the U.S. Federal Reserve and embark on another round of bond buying later this year, despite tentative signs that the U.K.’s economic contraction is coming to an end, and an intensifying debate among central bank officials over how best to stimulate growth.

The Fed on Thursday said it would buy $40 billion of mortgage-backed securities a month and keep interest rates low through 2015 in an aggressive push to foster growth and tackle unemployment.

Facing a similarly weak outlook, the Bank of England’s rate-setting Monetary Policy Committee is tipped to increase the target for its asset purchase program in November when its current target of £375 billion ($604 billion) is expected to have been reached. Moreover, some economists expect the BOE to double down on stimulus by also taking the central bank’s benchmark rate below its current 0.5%, which would mark a record in the BOE’s 318-year history.

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PG View: More specifically, the BoE’s minutes stated that some policymakers “felt that additional stimulus was more likely than not to be needed in due course,” due to a the “subdued and uncertain” growth outlook.