Forex News – Bank of England expected to expand QE and add more stimulus

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The Bank of England policy meeting is scheduled for noon today London time. Speculation is that the central bank’s monetary policy committee (MPC) will decided to expand the current 325 billion pound asset purchase program. An additional 50 billion pounds is expected to be added in an effort to further stimulate the British economy.

Despite some positive economic data recently that show that the UK may avoid a recession, the 0.2 percent contraction in GDP seen in the fourth quarter of 2011 gives the case for more quantitative easing.

Falling inflation in the UK to around the bank’s 2 percent target for the medium term will allow for more easing. Inflation has been falling rapidly from the three-year high in September so the BoE can afford to print more money and spend it on  buying more bonds.

The BoE is expected to keep interest rates at the record low 0.5 percent.