Friday, March 12, 2010
QE works, says the Bank's chief economist
Posted by David Smith at 04:00 PM
Category: Thoughts and responses

A year ago, the Bank of England embarked on quantitative easing. By last month, when it paused, 200 billion of asset purchases, mainly gilts, had been completed. Did it work? Perhaps, in the absence of a counterfactual, we will never know. Spencer Dale, the Bank's chief economist, is however keen to bang the drum, as he did again in a speech today.

"One year on, there is a range of evidence some relatively hard, some more circumstantial that quantitative easing is having its desired effect," he said. "Asset prices have increased substantially, companies have made record recourse to debt and equity markets, confidence has recovered and inflation expectations remain firmly anchored. But there is still a long way to go. The bulk of our asset purchases have been made only over the last 9 months or so. Much of their effect on nominal spending and inflation is still to come through. We are likely to learn a lot about the transmission of those purchases and about their ultimate impact over the course of the next year."

The speech is here.