Bank of England lifts QE programme by �75bn
THE Bank of England today injected a further �75billion into its programme to boost the money supply, in a move to support the UK’s faltering economic recovery.
The bank’s Monetary Policy Committee voted to lift its quantitative easing (QE) programme from �200bn to �275bn, while leaving the base rate on hold at its record low of 0.5%.
The move, which represents the first change to QE since November 2009, comes after a downgrade in growth figures for the first and second quarters of 2011 raised fears of the double-dip recession.
The Bank of England said it was boosting QE because “tensions in the world economy threaten the UK recovery” and the slack in the economy was likely to be “greater and more persistent than previously expected”.
Paul Winter, chief executive of Ipswich Building Society and chairman of the Institute of Director’s Suffolk branch, said he was not surprised that the MPC had announced a further round of QE this month, but the scale of the cash injection was bigger than he had expected.
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“They could not leave it and have another month of ‘will they, won’t they’ uncertainty, but I had assumed that they would go for �50billion, so the �75bn is rather more than I was expecting.”
Mr Winter said the move was welcome in principle but it remained to be seen how effective it would be in boosting the economy.
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“It will only be of any use if it works its way through in to the real economy and that it problematical with lenders, particularly the major banks, being asked to increase their levels of liquidity. I am not hugely confident.”