King Keeps Rate, Asset Plan Steady as Draghi’s ECB Considers Euro Turmoil

Bank of England officials maintained their current round of stimulus as European officials hold a summit on the debt turmoil that GovernorMervyn King says is beyond his control. The Monetary Policy Committee voted to keep the target for bond purchases at 275 billion pounds ($432 billion), as predicted by all 39 economists in a Bloomberg News survey. It increased the target by 75 billion pounds in October and expects those purchases to be completed in February. King said last month there’s little point in “fine tuning” policy as officials watch to see how events play out.

The European Central Bank cut interest rates today and euro-area leaders will start a two-day summit whose outcome could determine if any of the region’s members can keep a top credit rating with Standard & Poor’s. While King is holding fire on more stimulus, he introduced a new sterling liquidity measure this week to help banks weather any further escalation of a crisis that’s crimping demand and pushing up funding costs. In the U.K., Bank of England policy maker Martin Weale said Nov. 25 there’s a “strong case” for further QE in the future, and Paul Fisher has also indicated more stimulus may be needed. Still, officials said in the record of their November meeting there is “little merit in attempting to fine-tune” policy while the current program is underway. “It is hard to see what the MPC could have done today,” said Vicky Redwood, an economist at Capital Economics Ltd. in London. “However, the committee has sent some strong signals that further QE is likely before long and we expect to see a further extension of the program at the start of the new year.”

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