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BoE economist calls for quantitative easing exit strategy

Bank of England chief economist Spencer Dale has called for the Monetary Policy Committee to begin planning a quantitative easing exit strategy.

Speaking at the Annual Conference of the Society of Business Economists in London yesterday, Dale called for a planned exit from the MPC’s current strategy, which has seen more than £80bn pumped into the economy since March.

Economists have debated at to when the quantitative easing strategy will end – the official end of the potential £150bn programme is July 2009, but some analysts have predicted that the Bank of England may have to ask the Treasury to allow them more easing funds if the economy does not react to the money injection.

But Dale, who is a member of the MPC himself, says the inflation target is still the most important goal for the Bank.

He says: “It will be the outlook for inflation relative to target that will determine the rate at which the current exceptional degree of monetary stimulus is withdrawn as economic prospects recover. When the time comes, the MPC can tighten policy both by raising bank rate and by selling assets.

“The inflation target remains a vital pillar of the macroeconomic policy framework, but policymakers need to make difficult judgements about asset prices and imbalances but they also need effective and efficient tools to enact those judgements.”

Dale says this process of increasing the robustness of the macroeconomic policy framework needs to be “continuous, not a one-off response to the current crisis”.


Ecclesiastical screens

Rob Hepworth has plenty to be positive about. A senior fund manager at ethical investment house Ecclesiastical Investment Management, he has been one of the few fund managers to have benefited from the economic storm that has wrought havoc through the industry and wider economy over the last two years.

Survey reveals UK equity optimism

Over two-thirds of private client investment managers and stockbrokers believe there will be a further rally in UK equities within a year, according to a survey by Apcims and ComRes.


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