BoE holds rates at historic low: reaction We still expect the MPC to be disappointed by the pace of growth and lean toward tapering out its purchases beyond May... So we maintain our forecast for £25bn of QE to be announced then, against the consensus expectation of no further increases, but acknowledge that an extension is a closer call and more data-dependent than it was in February. We weren't expecting to hear anything new from the MPC today following last month's increase in the bank's asset purchase programme. What data there has been over the past month won't have shifted the bank's view on the outlook for the economy or inflation since it set out its view in the Inflation Report, and May will still be the month to watch for any policy change. While it is a stone dead certainty that interest rates are going nowhere for some considerable time to come, the outlook for quantitative easing is far less clear - although it is odds-on that the Bank of England will now sit tight until at least May. While we expect a final £25bn dosage of QE to be enacted later this year (most probably in May) in response to likely ongoing fragile economic activity, it is very possible that the Bank of England could be done on the QE front barring a renewed serious downturn in economic activity. This decision was expected as the current round of asset purchases is set to run until May. Since the MPC has been signalling that the current policy stance is broadly appropriate, it appears that the economic climate would have to deteriorate to prompt a further extension of QE. Nevertheless, with economic conditions fragile and the level of uncertainty high, monetary policy decisions are still likely to be finely-balanced. Any other outcome would have been a huge surprise, mainly of course because the committee agreed to step up the level of QE by a further £50bn last month, but also to some extent because monetary policy changes in March are very rare. Perhaps ironically the only March move ever made by the MPC was one of the most radical three years ago, when it introduced QE and cut rates to near zero levels ... Despite the unlikely prospect of a policy change this time, our guess is that the discussion was a lively one. Indeed recent indications have pointed towards a widening of divisions on the committee between members that seem certain that more QE is needed (Posen and Miles) and those that appear sceptical (e.g. Weale and Fisher). The key areas of discussion are set to have been i) continued signs of an earlier than expected economic upturn; ii) whether inflation prospects are stickier than envisaged at the November Inflation Report; and iii) the potential effects of higher energy prices.