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OECD Recommends Further Stimulus for UK Economy

The Bank of England should be ready to inject more money into the economy, the Organisation for Economic Co-operation and Development (OECD) has said.

If the UK economy remains weak, a further round of quantitative easing would seem the best option, it said.

The Bank has so far pumped £375bn into the financial system, creating money to buy back government bonds.

Some policymakers have questioned the effectiveness of QE, but the OECD said further action could “be warranted”.

The OECD said in its latest UK economic survey: “Overall, in the current economic situation, further expansion of the asset purchase programme would be warranted if the economy stays weak.”

It said cutting interest rates to zero was another option to consider, but added that it would not have “clear advantages over expanding QE”.

The Paris-based economic think tank forecasts that the UK’s economy will grow just 0.9% this year after shrinking by 0.1% in 2012.

via BBC [1]

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Alfonso Esparza

Alfonso Esparza [6]

Senior Currency Analyst at Market Pulse [7]
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza