So much for Central Banker optimism.
Bank of England governor Mervyn King made clear his frustrations in comments today after it was announced that the Bank of England would expand its quantitative easing program. Over the next few months, the Bank will inject another Ã‚Â£75 billion ($115.7 billion) into the economy.
Ã¢â‚¬Å“This is the most serious financial crisis weÃ¢â‚¬â„¢ve seen at least since the 1930s, if not ever,Ã¢â‚¬Â King said following the BankÃ¢â‚¬â„¢s announcement.
The Bank has already invested Ã‚Â£200 billion pounds ($308.4 billion) by buying government bonds. The cash generated by the sale of these instruments was intended to provide the commercial banking system with additional funds for commercial lending activities. The expectation is that this would lead to an increase in consumer spending.
It has not worked out that way. This past Wednesday, the Office for National Statistics reduced its outlook for economic growth in the UK to a dismal 0.1 percent due largely to weaker domestic spending. For the second quarter of the year, consumer spending declined 0.8 percent to match the greatest single-quarter reduction in consumer spending since the first quarter of 2009.
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