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

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.”