BoE Keeps QE On Hold: Weighs Radical Tool Options

The Bank of England left its four- year-old bond-purchase program unchanged today as policy makers debate more radical measures to aid the recovery.

The Monetary Policy Committee led by Governor Mervyn King maintained its target for quantitative easing at 375 billion pounds ($565 billion). The decision was forecast by 29 of 39 economists in a Bloomberg News survey, with the remainder having predicted an expansion of at least 25 billion pounds. The pound rose after the announcement.

The division among economists followed a split MPC vote last month and comments from policy makers on possible tools from negative interest rates to a prolonged period of bond buying. The broadened discussion on how to help an economy that’s barely grown in the past two years comes as the BOE prepares for incoming governor Mark Carney, who has said that policy isn’t yet “maxed out.”

“The economy is not quite weak enough to justify more QE, or indeed other forms of monetary easing, just yet,” said Martin Beck, an economist at Capital Economics Ltd. in London. “But with fears that the economy will enter a triple-dip recession still very present, further action by the bank in the next month or two is likely.”


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell