BoE extends QE program

From FT:

The Bank of England’s monetary policy committee voted on Thursday to expand its vast programme of pumping cash into the UK economy by £25bn, in a sign it remains worried about the outlook in spite of incipient signs of recovery.

[T]he addition of a further £25bn to the programme, which is likely to be used mostly to buy government debt, signals a slowing down in the pace of the Bank’s monetary easing. In August, the Bank had opted to expand the programme by £50bn, which has been used up during the past three months.

The governor of the Bank wrote to the chancellor, Alastair Darling to seek approval for expanding the asset purchase facility, which will take the total programme undertaken by the Bank to £200bn. The new money will be spent during the next three months.

FT Alphaville is putting together reactions from analysts. Here’s one from Thomson Reuters strategist Divyang Shah:

The 25bn coupled with the fact that the purchases are going to be paced over 3-months also highlights the low probability that QE will be expanded in the future. But given the way in which the economy has tended to surprise to the downside, the impact of higher unemployment and credit outlook it is never a good idea to write off the potential for further QE completely.

Read the news via FT, or the reactions via FT Alphaville.


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