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Quantitative easing road show

Jeegar Kakkad July 22, 2009 15:44

The Bank of England is trying to spread the message of Quantitative Easing, and so has sent Deputy Governor Charlie Bean on a seven day tour of the country to explain its policy.

They've even produced a fairly snazzy guide on what it does, although it's best described as 'Quantitative Easing for Dummies'. 

But as my colleague points out...why are they just doing this now?

The Bank's QE programme began in March. The real concern is how will they wind up their QE policy. As David Smith points out:

"Many in the markets think that the Bank of England's programme of quantitative easing has come to an end, while others believe there is further to go. The monetary policy committee's July minutes...failed to clarify things either way. On balance, though, the Bank was more upbeat on economic activity and also believed near-term inflation would be slightly higher than it expected, both of which argue for caution on further QE."

In the US, Chairman Ben Bernanke has set out the Fed's exit strategy

"I want to be clear that we have a very long haul here because, even if the economy begins to turn up in terms of production, unemployment is going to stay high for quite a while, so it’s not going to feel like a really strong economy."

He went on to say that while interest rates are likely to remain low for some time, the Fed's exit strategy could involve setting a floor on interest rates and selling assets to the private sector.  

But no word from the Old Lady on when she'll wind-up her tour into the unkown.

 

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