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QE2 still likely as recovery fades

The decision by the Monetary Policy Committee (MPC) not to follow the Fed in implementing more quantitative easing (QE) today no doubt reflected the stronger tone of the economic data over the past few weeks. But with the fiscal squeeze looming, limited comfort can be taken from the past strength of the economy. We still think that further QE is needed to see the economy through the biggest government spending cuts in decades.

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