Easing fear of inflation sparked QE says Miles

Published on Tuesday 11 October 2011 01:43

THE Bank of England’s monetary policy committee took the decision to inject a further £75 billion into the economy because it felt inflationary pressures had eased, it was said yesterday.

David Miles, an external member of the committee, also said he was reassured by the volume of research that pointed to the positive impact of the asset purchase programme.

Addressing an audience at the Royal Economic Society in London, Miles noted the deterioration in the international outlook, employment growth and consumer confidence.

“Whether the marked deterioration in financial markets and business and consumer optimism will last is hard to know. But monetary policy needs to be set in real time,” he said.

“Right now the likely future levels of UK inflation pressures look to me materially lower than in August.”

He said this was why the decision was taken to embark on more asset purchases.

As for the effectiveness of quantitative easing, he said a range of estimates suggested that the asset purchases had about the same effect as a cut in Bank rate of between 1.5 per cent to 3 per cent, increasing GDP by about 1.5 per cent to 2 per cent.

Miles notes his scepticism about the reliability of many econometric estimates but finds it reassuring that a range of very different techniques give broadly similar results.

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FTH22inarow

Tuesday, October 11, 2011 at 02:46 PM

And yet they can't afford decent pensions, same old tories robbing from the poor to give to the rich!

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