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‘Bank of England decide not to inject more cash into country’

August 7, 2009 at 4:23 pm

Many in the City were left disappointed last week as the Bank of England decided not to inject more cash into the economy in its quantitative easing programme. Although it was widely expected to add £25 billion to the current £125 billion already printed, the Monetary Policy Committee voted against increasing the amount of money being printed. Interest rates were also left unchanged.

The quantitative easing (QE) programme has been in place since March, when it was decided that the Bank would buy off government debt by printing new money. This is a common technique used by economies during times of recession. The Chancellor decided that the maximum amount to be authorised would be £150 billion, and it was widely expected that the remaining £25 billion would be injected into the scheme. But in the end it was left unchanged.

The Bank has now announced that it will “review the scale of the programme again" in August. But, for some, the fact that it has not been renewed this time around means that the QE scheme will be closed down. Some have voiced their concern about the move. Speaking in The Telegraph, Dominic Bryant of BNP Paribas said that the move “disappointed expectations” and has “increased uncertainty” surrounding the commitment of the Bank to QE.

Some have gone even further, with the BCC (British Chambers of Commerce) calling for the level of QE to be raised to £200 billion in the near future. The decision also led to a sharp fall in government bond prices after it was announced.

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