The Bank of England looks set to leave interest rates at a record low tomorrow and may give little away about the future of its asset purchase scheme ahead of new growth and inflation forecasts next week.
The central bank cut interest rates to 0.5% in March and indicated they were unlikely to go any lower. That shifts the focus to whether the Bank will announce fresh plans to boost the supply of credit in the economy.
The UK central bank is already two-thirds of the way through its initial programme to buy gilts and corporate bonds with newly-created money and it is likely to reach the £75 billion sterling total by the end of this month. It has the leeway to extend the scheme by a further £75 billion if it sees fit.
However, policymakers may be reluctant to take this decision so soon. Instead, the MPC may want to take some time to assess the impact of the cash injections before spending any more, especially as money supply data for the first month of the programme suggested there had been little impact yet.
Also, recent surveys have indicated the worst of the downturn may be over, removing the urgency for any immediate further stimulus.
The Bank of England will have the chance to provide a deeper insight into its thinking when it publishes new quarterly forecasts next Wednesday.
