New York, New York (PressExposure) August 09, 2010 -- "Mann International" analysts were apparently unsurprised after the minutes of the last meeting of the Bank of England's Monetary Policy Committee (MPC) revealed that members discussed the possibility of increasing the Bank's holdings of long-dated gilts beyond the Â£200bn it already holds for the first time since its February meeting.
The firm believes that interest rates will remain low for far longer than expected and that the Bank will eventually be forced to begin another round of quantitative easing as the austerity measures outlined by the coalition government begin to adversely affect short-term growth prospects.
"Mann International" suggests that although the gaze of the markets has been focused elsewhere since George Osborne's Budget address, their attention is likely to return to UK matters if the Bank reinstates its QE program. "Sterling will undoubtedly take a beating", said one of the "Mann International" analysts.
Quantitative easing is a process in which the central bank creates money to buy debt issued by the government.
"Mann International" said that the imminent release of the results of the European banking stress tests may exert pressure on the flow of credit which may force the Bank of England's hand.