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BoE governor Mervyn King leads MPC calls for more QE

Bank of England BoE Panorama 480

Bank of England governor Sir Mervyn King led a minority of monetary policy committee members in voting for another round of quantitative easing at its February meeting.

The minutes from the meeting, published today, show King was joined by Paul Fisher and David Miles in voting to raise the QE programme to £400bn from £375bn, but they were outvoted nine to three.

The minutes state: “There was a range of views on the committee about the marginal impact of a further round of asset purchases at the current juncture, but members agreed that asset purchases remained an effective tool for lowering a range of market interest rates, supporting asset prices.

“The continuing process of portfolio rebalancing should help to support spending and nominal demand, although the precise extent to which it would do so was uncertain.”

All members agreed to continue with the current round of QE, the effects of which are still feeding through to the economy.

The MPC also considered purchasing assets other than gilts and changing the marginal rate of remuneration banks pay the reserves at the Bank of England.

It decided against more radical moves but pledged to continue consideration of all policy measures available.

The MPC agreed that the Funding for Lending scheme is working as planned, but decided it is still too early to judge its success.

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. It’s not to early to judge the ‘success’ of F4L as far as savers are concerned – an unmitigated disaster as banks ‘cut them adrift’ with ever more pitiful rates

  2. I don’t have his brains, I don’t have his knowledge but please I beg you no more QE!
    Look what it’s doing for Sterling, look what it’s doing for interest rates and savings. You are decimating the prudent, the hard workers, the savers and the industrious for a quick fix and to the benefit of the spendthrift, the feckless and the idle.

  3. In others words, “we don’t really know what to do next to stimulate the economy, but will continue to do the things we have done before, which don’t seem to work, just in case they do”
    These people are allegedly cleverer than the man in the street, who knows that if you curb public sector spending by putting more workers on benefits, there is no benefit to the overall economy.
    EG – Feckless Jobless mother of 11 children with an unemployed partner getting the council to build her an eco friendly 6 bedroom home for her brood, at a cost to the council tax payers in her area of over £400K, despite occupying two ajoined houses specially adapted for the purpose of housing them.

    Foreign criminals permitted to continue residing in our country under so called Yuman Rites on benefits

    The threat of millions of poor Rumanian and Bulgarian benefit chasers coming into the country uncontrolled and with no economic benefit to the country. Exactly how did these two countries qualify for entry in to the EU as their economies are shot at.

    The there is the RDR, a mixed bag of incorrect assumptions, poor research and a total lack of consideration of mid income consumer needs which in the next 12 months will do more harm to our economy by reducing capital into the markets via financial product sales than anything else.

    You just could not make this up!

  4. the elephant in the room 20th February 2013 at 11:42 am

    Steady now Mr Katz, it is also for the innovators, entrepreneurs and risk takers; for the survival of many SME’s and for the benefit of the many homeowners struggling to stay afloat. Without these people where would we be?

    Your anger is somewhat misguided and your memory short – you should really direct it at Goldman Sachs, Merrill Lynch, UBS, Deutsche Bank and all the other idiots that caused this whole mess in the first place….

  5. HK @ 10:41

    Sterling is now an actor in a thinly disguised ‘beggar-my-neighbor’ currency war.

    A colossal amount of money is about to be created out of thin air in an attempt to reflate this bubble.

    My old Mum calculates she will die before her capital runs out because she, like many other pensioners is running down her savings (which used to provide a reasonable income).

    She worked very hard from being a WWII ‘land girl’ until her late sixties and people like her are being stiffed.

    Pity she was’nt German eh? (Now there’s an irony).

    Mum hopes that wherever she goes next, there will not be any over-bearing, spendthrift and feckless Government and their taxes.

    I guess that place will be heaven then.

  6. Elephant @ 11:42

    I’m pretty sure the ‘idiots’ that caused the mess were the people on the street (US and UK) who took out large amounts of mortgage debt that they couldn’t actually afford to maintain or repay.

    The whole ‘blame the banks’ argument is getting rather tiresome now IMO.

    Another small amount of QE will have no real benefit at all but instead will continue to suppress IR and all that’s linked to them. Pointless.

  7. Anon @ 12:47 pm

    As house prices are largely a function of the availability of credit, then your ‘idiots’ were simply people being willingly supplied with ‘easy money’ by the usual suspects … bank/bankers, with the full connivance of the US/UK Governments.

    Don’t blame the everyday people, who mostly live lives of quiet desperation, look instead at the manipulators/policymakers.

  8. But Anon (@2:09), just because everyday people had the ability to be supplied with something, they weren’t forced to accept it were they?

    One can argue that they shouldn’t have been offered it in the first place, but as far as where the responsibility lies, it’s squarely with the people on the street being greedy. They’re only living in ‘quiet desperation’ because they’ve over-stretched themselves and are now paying the price.

  9. Anon @ 3.33 pm.

    Did you know that Government guidelines for public sector websites say that they should be targetted at age 12.

    Yes, 12.

    It could be argued that they have reaped what they sowed with the comprehensive education experiment.

    (It can almost be measured by the quality or lack of, of comments on social media sites such as Friends Reunited – there is a clear decline in standards of English through the late sixties onwards).

    The jaws of the financial vice snapped shut in the early 1990’s when interest rates took off and a few million people subsequently went bust.

    This time around, the numbers (mortgage borrowings) are greatly amplified and therefore, it won’t take much of an increase in interest rates for those jaws to snap shut again.

    The everyday person simply does not comprehend the risk, they just see ‘everybody else doing it’ and think that they should too or ‘miss out’ e.g. when might buy-to-let become buy-to-fret?

  10. Back in the day, my Dad needed a mortgage.

    He had to go and see his bank manager at the Midland, who then carefully went through Dad’s finances and then made a judgement call as to whether or not Dad was going to be loaned this money, or in the jargon ‘be good for it’.

    It is disingenuous for anybody to suggest that people in the modern era were ‘being greedy’.

    Banks should not lend money inappropriately (and then expect the taxpayer to bail them out when it all goes wrong).

    That really is the bottom line.

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