Bof E -QE3 on the table today ?

Today is very much a "Wait and see day" as we have the Bank of England's Monetary Policy committee (MPC) meeting to decide Interest rate policy that isn't going to move higher in current market conditions, but more importantly they may be discussing the possibility of more Quantitative Easing (QE3).

The general view is that it will only be discussion at this stage but they could be formulating a safety net plan, if there is any further dip in the low growth level in the UK.

Commenting ahead of this meeting , David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:

“Following the unanimous vote at the last MPC meeting in favour of keeping interest rates on hold, it is unlikely that we will see a change today. Given signs of weakness in the economy, there are arguments for raising the QE programme immediately from £200bn to £250bn. But we would not be surprised if the MPC decides to delay such a move until later in the year because of concerns around inflation and a reluctance to alter policy too abruptly.

“At the same time, the MPC cannot ignore the worsening international situation and the need to underpin business confidence. It would therefore be helpful if the Committee takes an early opportunity to make it clear that unless circumstances significantly improve, interest rate increases will not be on the agenda for another year. In the US, the Federal Reserve has stated recently that it expects to keep interest rates at very low levels until at least the middle of 2013. British business would welcome a similar move in this country.”

Markets are also waiting to see what exactly is going to be included in the US 300 billion aid package, to be announced later today by President Obama and this has halted the widespread equity selling, with rebounds of 2.5% seen in the US and over 3% in the Footsie yesterday.

Nothing out there to show at this moment market sentiment has changed  but ahead of Obama's speech it is risky to be short when there is the possibility of QE3 hitting the markets.