Economy
Standard Chartered: QE to end at GBP 200bn |
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| Economy | |
| Written by Gary Howes | |
| Tuesday, 02 February 2010 | |
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However MPC members are likely to show a willingness to do more at a future date if required.
Standard Chartered (LON:STAN) believe that the Bank of England is likely to call an end to its programme of quantitative easing at GBP 200bn. Indeed the quantitative easing programme has already reached its GBP 200bn target, and on the 4 February, the MPC faces three choices according to Standard Chartered: (1) to extend the quantitative easing (QE) programme, (2) to announce an end to the programme or (3) to pause on QE, leaving open the option to resume asset purchases should the need arise. Samra Al-Harthy and Sarah Hewin at Standard Chartered in London say: "The majority of MPC members are likely to vote for a pause in the programme, while indicating a willingness to do more at a future date if required. "But the decision on the next steps is unlikely to be without dissent. First, some, but not all, of the objectives of QE have been achieved (see Appendix). "The ‘bottom-line’ targets were inflation and growth, and both are finally rising, though BoE forecasts made when QE was initiated in March 2009 envisaged somewhat stronger growth by now, and lower inflation (CPI inflation is above even the upper bounds of the forecasts made in the February 2009 Inflation Report). "Second, there is uncertainty over the time lag involved in QE, so some MPC members will expect the impact of the GBP 200bn of asset purchases to become more apparent in the coming months. Third, there are diverging views on medium-term inflation risks, reflecting uncertainty over the size of the output gap and the potential growth rate."
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