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QE predicted to reach £500bn by the end of 2012

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Economic research consultants Capital Economics expect the Bank of England to increase its quantitative easing programme to £500bn by the end of the year.

The BoE increased the programme by £75bn in October, to a total of £275bn.  CE believes the committee could increase the programme by a further £75bn in February, after October’s round of QE is completed.

So far the programme has concentrated on buying up more gilts but CE says the committee will eventually start to buy assets other than these bonds.

In a note published today, CE chief UK economist Vicky Redwood says: “The MPC looks unlikely to do anything more while the asset purchases which began in October are still underway, especially given the recent slight improvement in the economic data.

“However, we doubt that the news has been strong enough to stop the MPC from voting for more stimulus next month, coinciding with the next inflation report. We expect the QE programme to reach some £500bn by the end of this year.”

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Readers' comments (2)

  • effectively this is really the national credit card where the BOE '' waves a magic wond and hey presto the Gov has money in the current account, all be it via the purchase of bonds etc, and how much more will be required if things get worse in euro magic kingdom land?

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  • It seems to me that the government and the BofE are living in 'cloud cuckoo' land (albeit the current government is simply trying to clean up the mess that Balir and Brown left behind).

    Governments here and abroad have no idea how to sort out the problems. I do ! The government needs to stop spending money it doesn't have (slash NHS, welfare and defence budgets) and get people working - especially the lazy and feckless who currently draw benefits for sitting on their asses. Then string up the bankers and people like Blair (for fraud and dishonesty), and finally get rid of all the quangos and government non-jobs (outreach workers, 5-a-day coordinators, environmental advisers etc etc).

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