The main event this week in Europe was from the United Kingdom as their central bank released their minutes showing that the vote on the quantitative easing methods were split three ways, where one of the members wanted to leave it steady at 175 billion pounds, the other wanted to expand it to 215 billion pounds and the rest of the nine members of the MPC were extending it to 200 billion pounds. Regarding interest rates, it was unanimous.

The program is aimed at providing tranquility in the financial and banking system, so that the lending system is revived and banks start lending out to businesses and consumers which will help increase investments and spending in the nation. Also the stimulus is set towards avoiding the decline in prices.

As the vote was split three ways, 7-1-1, we see that policy maker David Miles wanted to expand program to 215 billion pounds to boost growth levels, while Spencer Dale wanted the program to be left steady at 175 billion pounds as he stated that more money applied in APF, might trigger inflation risks in the long term.

The asset program will be continued for the upcoming three months, which is when the February Inflation Report will be released providing an outlook for economic activities and inflation since November's inflation report. Regarding inflation, the minutes said that short term rates will incline led from higher petroleum prices and reversal of the VAT cut.

The program has been successful at providing stability in prices as earlier this week we saw that deflation risks have eased as CPI and RPI surpassed expectations led from higher fuel prices and an incline in air tickets fares, although prices eased their slide and rose for the first time in eight months, yet the general price levels remains under pressure from the worst recession since WWI.

The decline in prices in the nation were a result of crippled demand that was a result of the fragile job market, yet this week we saw that retail sales on an annual basis rise to a 17-month high. The higher retail sales have helped narrow the budget deficit which during the course of this week, we witnessed narrow yet remains to mark the worst deficit on the month of October since 1993.

From the euro zone, ending the week for us was ECB President Jean-Claude Trichet stating that the central bank is going to exit the stimulus programs gradually before it setoff inflation on the long term, and this factor is faced by other central banks around the world.

The ECB stated that it is not going to resume its 12-month loans after the third installments in December, while the council member said that the bank is going to offer lower three and six month loans in 2010.

Although the ECB is discussing ending the stimulus measures in the euro area, which is worth 60 billion euros towards purchasing governmental bonds, yet they said this did not mean that interest rates will be raised from the record low.

Hopes are now on the stimulus packages that are being used by major economies which have helped ease the economic deterioration and slow down the decline in prices to boost growth levels.