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BOE to hold off on QE until early 2013: poll

LONDON -- The Bank of England will switch off its printing presses until early next year following a swathe of upbeat data that prompted economists polled by Reuters to abandon calls for more monetary stimulus in November.

The British central bank has already pumped 375 billion pounds (US$603 billion) into markets through its quantitative easing program and until data showed a much better than hoped for bounce in third-quarter growth it was expected to top it up.

While the poll of 65 economists, taken this week, still predicts the bank will spend another 50 billion pounds buying British government bonds, or gilts, it suggested the bank will now wait until the first quarter of next year to do so.

There was just a median 40 percent chance the Monetary Policy Committee will act on Nov. 8, the latest poll said, down from a 60-percent chance in an Oct. 19 survey. It is also down sharply from a 70 probability of more QE by year-end polled just three weeks ago.

“We no longer expect the MPC will expand QE further at the upcoming November meeting,” said Michael Saunders at Citi.

Saunders, along with two other economists in the poll, has the highest forecast for total QE spend of 500 billion pounds — around one-third of Britain's gross domestic product.

Thirty-four of 53 economists predict more QE compared with 37 of 48 in an Oct. 19 poll. The median was for a total spend of 425 billion pounds, in line with recent polls.

“GDP was stronger than expected, the labor market was stronger,” said Nick Bate at Bank of America-Merrill Lynch, who has scratched his forecast for additional QE, and said financial conditions were improving.

The British economy expanded 1 percent in the third quarter, smashing forecasts for 0.6 percent growth, as London's hosting of the Olympic Games and extra working days lifted output more than anticipated.

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