Bank Of England Called On To Increase QE (QE = Print Money)

The Telegraph (UK) ^ | Edmund Conway

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Bank Of England Called On To Increase QE

The Bank of England has been urged to increase its quantitative easing (QE) programme to a total of £225bn – more than the gross domestic product of Greece.

By Edmund Conway, Economics Editor
Published: 8:56PM GMT 31 Oct 2009

The Bank's Monetary Policy Committee, which is meeting this week, will be pushed by economists to raise the amount of bonds and gilts it plans to buy by a further £50bn, following the recent news that unlike almost any other major economy Britain remains mired in recession. The increase would mean the Bank would soon be holding bonds worth more than 15pc of Britain's entire economy in its balance sheet – unknown territory for any developed world central bank in modern history.

However, this is the only solution given the relative depth of Britain's recession, according to a range of monetary economists, including Tim Congdon and analysts from JP Morgan and Capital Economics. It comes only days after the US confirmed that it has now pulled out of technical recession, growing by a strong 0.9pc in the third quarter of the year. It is a contrast to the UK, where GDP shrank by a further 0.4pc in the same period, making this the longest recession in recorded history.

Mervyn King outflanked on quantitative easing by MPCMr Congdon, one of the world's foremost experts on monetary economics, said his suspicion that a further £50bn worth of QE would be necessary was fuelled by the news last week of a sudden unexpected fall in the amount of money flowing around the "real" economy. A poll conducted by Reuters shows that two thirds of economists expect the Bank to increase its programme on Thursday...

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The Grim Reality Is That America Is Not Out Of Recession