Wednesday, February 11, 2009
The Bank digs deep
Posted by David Smith at 01:00 PM
Category: Thoughts and responses

In its quarterly inflation report the Bank of England predicted a deeper recession than three months ago - and a much deeper one than in August last year - alongside an extended period of below-target inflation. Mervyn King, the governor, said: "The UK economy is deep recession", while insisting that policy had "responded vigorously to that prospect".

Much of the discussion at the press briefing was about "unconventional" monetary policy measures. The view that the Bank was cool about quantitative easing appears to have been wrong. This week it will embark on credit easing through the 50 billion asset purchase facility. QE will follow quickly, it seems, and does not have to wait for Bank rate to go to zero. The report is here