Category Archives: Quantitative easing

Bank of England’s quantitative easing scheme let ‘inflation take root’

Posted on by

UK economy became reliant on cheap money due to the Bank’s actions, warns former permanent secretary to the Treasury

The Bank of England’s quantitative easing money-printing programme enabled high inflation to take root in Britain, while creating “windfall gains” for the rich, a former Treasury mandarin has warned.

Nick Macpherson, who was permanent secretary to the Treasury under the last Labour government and during David Cameron’s premiership, said the central bank’s £895bn bond-buying stimulus programme had gone “too far” and made the inflation shock hitting Britain worse.

Continue reading...

Bank of England hikes interest rates and says inflation will hit 13%

Posted on by

Base rate raised by 0.5 percentage points to 1.75%, as Bank says inflation will hit 13% in October

Vladimir Putin’s invasion of Ukraine has left Britain on course for a recession lasting more than a year and inflation above 13%, the Bank of England has warned as it raised interest rates for a sixth successive time.

Threadneedle Street said it had no choice but to increase borrowing costs by 0.5 percentage points to 1.75%, blaming Russia for cost of living pressures not seen in more than four decades and a 5% drop in living standards straddling this year and next – the biggest since records began in the 1960s.

Continue reading...

Is ‘hysterical’ market speculation pushing us towards another crash?

Posted on by

Despite Covid, global stocks started 2021 on a high. But some analysts warn of an ‘epic’ bubble, amid fears that the flow of stimulus has created a monster

Insurrections are not usually seen by investors as buy signals. Yet even as rioters stormed the seat of US legislative government last week, stock market indices hit new highs in New York, adding another chapter to 12 months of apparent defiance of economic gravity.

Wall Street, measured by the benchmark S&P 500, was not alone in starting 2021 with a bang. London’s FTSE 100 jumped by more than 6% in the first week of the year as investors took in a heady cocktail of a President Joe Biden ready and able to spend money, cheap borrowing costs, and the hopes that vaccines will end the coronavirus lockdowns. Yet amid the exuberance a serious concern looms: are we on the cusp of another colossal crash?

Continue reading...

ECB U-turn shows it fears coronavirus could destroy eurozone project

Posted on by

Bank now realises Europe will sustain grievous economic damage from Covid-19

Weak. Clumsy. Behind the curve. The European Central Bank took stick for its initial response to the Covid-19 pandemic – and rightly so.

Those accusations can no longer be levied after the ECB used an emergency meeting to launch a gigantic new package of quantitative easing (QE) – the electronic money creation device that has become a key tool for central banks since the financial crisis of 2008.

Continue reading...

Reserve Bank may create money to boost economy when rates drop to 0.25%

Posted on by

Governor Philip Lowe says quantitative easing ‘could help’ but it is ‘not on our agenda at this time’

The Reserve Bank may create money to buy government bonds if it runs out of levers to boost the economy when it drops the official interest rates to 0.25%, its governor, Philip Lowe, has said.

Lowe told the Australian Business Economists dinner in Sydney on Tuesday that quantitative easing “could help” if further interest rate cuts and fiscal stimulus failed to boost the economy although it was “not on our agenda at this point in time”.

Continue reading...