Will QE help BoE to bring interest rates back to normal
David Miles, policymaker of Bank of England said that quantitative easing could bring some speedy return to normal rates as it was before. Last month, the Bank of England voted to increase its quantitative easing programme by 50 billion pounds, but a 75 billion pound rise was backed by Miles. He said that a bigger injection of monetary stimulus to boost Britain's economy could now enable the Bank of England to bring interest rates back to normal soon.
Since March 2009, the Bank of England has kept interest rates at a record low 0.5 percent, and has committed to a total 325 billion pounds of asset purchases, overwhelming UK government bonds. He further added that aggressively disappointing monetary policy now might bring us closer to the point at which Bank Rate could be moved back towards a more normal level where Bank Rate is certainly not at a normal level today.
A support of Miles for more monetary stimulus differs with comments by another member of Bank of England Monetary Policy Committee, Martin Weale stating that once current purchases are completed, he did not think there would be a case for more quantitative easing. Moreover, the Governor of Bank of England, Mervyn King told lawmakers that financial markets did not have strong expectations for further stimulus from the central bank. There are some politicians who criticized the Bank of England for buying only gilts and very limited amount of corporate bonds. But Miles being defensive said that simply looking at government bond yields was a wrong way to assess the impact of quantitative easing. There was much of the fall in gilt yields was due to a global appetite for safe assets, while quantitative easing had been proved instrumental in lowering the spreads of corporate bonds over gilts and making it cheaper to borrow for big companies. Are you in need of cash urgently just apply with short term loans for bad credit @ http://www.shorttermloansforbadcredituk.co.uk/ and get money despite having imperfect credit score.
Miles also opposed the criticism that these methods had been bad for those who are about to retire. While these reductions had increased the cost of annuities that many British retirees could be able to buy in order to ensure a steady income. This was largely offset by a rise in the value of their investment funds. In addition, he explained that these lessening meant that there was lower unemployment and stronger economic growth.
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