QE - the stab in the dark

Wookster

I saw this article on QE and the discussions held by the MPC on how to implement it. Its quite scary, the extract that worries me most is

“the costs of doing too little at the start were arguably greater than the costs of doing too much”.

I have the feeling that the MPC simply does not know what it is doing.

http://business.timesonline.co.uk/tol/business/economics/article5931760.ece

Boost from 'printing money' may take months
Gary Duncan, Economics Editor
The Bank of England believes that it may take “many months” before the full benefits of its radical strategy of creating new money to boost the economy will be felt, it emerged today.

The Bank’s interest rate-setting Monetary Policy Committee (MPC) unanimously approved both this month’s half-point cut in rates, to a record low of 0.5 per cent, and the decision to begin “quantitative easing”, effectively printing money, minutes of its meeting a fortnight ago revealed.

But the record showed an intense discussion among the nine-member MPC over the likely amount of new money it may have to create, through buying up corporate and government IOUs from the markets, to rekindle growth in the economy

Radiantsoul

I think they know what QE will do, but have doubts over the speed and size of the impact.

Probably they want to do too much as they see deflation as a current risk and inflation as a minor one in the future. I can't see inflation as a major problem in the short term.

ess0two

I have the feeling that the MPC simply does not know what it is doing.



And you do mr wookster?