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| Bank of England warns of economic 'headwinds' | Bank of England warns of economic 'headwinds' |
| (35 minutes later) | |
| "Substantial headwinds" to economic recovery remain, including the value of the pound, the Bank of England's Monetary Policy Committee has said. | "Substantial headwinds" to economic recovery remain, including the value of the pound, the Bank of England's Monetary Policy Committee has said. |
| It said the "sterling real exchange rate might be above the level compatible with the necessary rebalancing of the economy". | It said the "sterling real exchange rate might be above the level compatible with the necessary rebalancing of the economy". |
| The minutes of its January meeting showed it voted 8 to 1 not to extend its quantitative easing (QE) programme. | The minutes of its January meeting showed it voted 8 to 1 not to extend its quantitative easing (QE) programme. |
| The Bank has injected £375bn into the UK financial system. | The Bank has injected £375bn into the UK financial system. |
| Under QE, the Bank creates money and uses it to buy government bonds to try to stimulate the economy. | Under QE, the Bank creates money and uses it to buy government bonds to try to stimulate the economy. |
| "The existence of a significant current account deficit at a time of depressed activity and considerable spare capacity could imply that the sterling real exchange rate was higher than the level compatible with external balance," the minutes said. | "The existence of a significant current account deficit at a time of depressed activity and considerable spare capacity could imply that the sterling real exchange rate was higher than the level compatible with external balance," the minutes said. |
| The pound has risen 2.3% against the US dollar, making exports more expensive to the world's largest economy. But it has fallen more than 6% over the the last six months against the euro. | The pound has risen 2.3% against the US dollar, making exports more expensive to the world's largest economy. But it has fallen more than 6% over the the last six months against the euro. |
| The minutes showed that the policymakers of the UK's central bank were concerned by "the drag to activity from fiscal consolidation, a further squeeze in household real incomes, and the deterioration in UK competitiveness over the past couple of years". | The minutes showed that the policymakers of the UK's central bank were concerned by "the drag to activity from fiscal consolidation, a further squeeze in household real incomes, and the deterioration in UK competitiveness over the past couple of years". |
| Monetary Policy Committee member David Miles was the only member to vote to increase the size of the asset purchase programme - by a further £25bn to a total of £400bn. | Monetary Policy Committee member David Miles was the only member to vote to increase the size of the asset purchase programme - by a further £25bn to a total of £400bn. |
| He argued that "the degree of slack in the economy... meant that it was probably possible to achieve higher output growth without causing any material inflationary pressure". | He argued that "the degree of slack in the economy... meant that it was probably possible to achieve higher output growth without causing any material inflationary pressure". |
| Official figures for fourth-quarter economic growth are due to be released on 25 January, which may raise the prospect of a triple-dip recession in the UK. | |
| In the minutes, the Bank added to those expectations by saying that "the unwind from the Olympic Games was expected to depress headline GDP growth significantly in the fourth quarter". | In the minutes, the Bank added to those expectations by saying that "the unwind from the Olympic Games was expected to depress headline GDP growth significantly in the fourth quarter". |
| The UK economy grew by 1% in the three months to September, helped by the Olympic Games during the summer. | |
| The economy is considered to have been in a recessionary period since the financial crisis took hold in 2008. |