BoE's Bean-monitoring whether more QE needed

inspector_monkfish

15:43 13Jul09 BOE'S BEAN-QE LIKELY TO TAKE AT LEAST 9 MONTHS TO HAVE EFFECT ON ECONOMY-WEB SITE

15:44 13Jul09 BOE'S BEAN-DON'T WANT TO WITHDRAW STIMULUS TOO EARLY, NIP RECOVERY IN THE BUD

15:44 13Jul09 BOE'S BEAN-WE WILL LOOK AT CONDITIONS ONE MONTH AT A TIME

15:44 13Jul09 BOE'S BEAN-THINGS ARE LOOKING AS IF THEY ARE HEADING IN THE RIGHT DIRECTION

15:45 13Jul09 BOE'S BEAN-WE CAN RAISE BANK RATE FIRST AND UNWIND ASSET PURCHASES LATER

15:47 13Jul09 BOE'S BEAN-WE ARE MONITORING TO SEE WHETHER WE NEED TO DO MORE

15:53 13Jul09 BoE's Bean-monitoring whether more QE needed

LONDON, July 13 - Bank of England policymakers are monitoring the sitiuation to see whether more needs to be done to boost the economy, although things are heading in the right direction, BoE Deputy Governor Charles Bean was quoted as saying on Monday.

Speaking to a business audience in Yorkshire on the first day of a tour to explain the central bank's 125 billion pound quantitative easing programme, Bean said withdrawing stimulus too early risked nipping any recovery in the bud.

"When we change bank rate we expect it to take nine months to work through. The quantative easing effects are likley to take that long or even longer," he was quoted as saying on "Thebusinessdesk.com" web site.

"But we are monitoring it to see whether we do more. Things are looking at least as if they are heading in the right direction. The aim is to get money spending growth back to a level consistent with trend growth and 2 percent inflation."

"We are going to need to withdraw the stimulus and we have two ways of doing that. We can raise the bank rate first and unwind asset purchases later.

"But we don't want to do it too early and nip the recovery in the bud. We will look at conditions one month at a time and try to form our best opinion," he added.

Heyman_2

inspector_monkfish wrote: »

"When we change bank rate we expect it to take nine months to work through. The quantative easing effects are likley to take that long or even longer," he was quoted as saying on "Thebusinessdesk.com" web site.

"But we are monitoring it to see whether we do more. Things are looking at least as if they are heading in the right direction. The aim is to get money spending growth back to a level consistent with trend growth and 2 percent inflation."

"We are going to need to withdraw the stimulus and we have two ways of doing that. We can raise the bank rate first and unwind asset purchases later.

"But we don't want to do it too early and nip the recovery in the bud. We will look at conditions one month at a time and try to form our best opinion," he added.

The problem is, because they essentially slashed the rate down to it's lowest level, as soon as they increase it even by a quarter of a point, it's going to send a huge signal to the markets that the Bank thinks the worst is over and intends to begin raising rates steadily (or quickly).

I think we have some way to go yet before they can do what he is talking about.


I don't think it's going to take 9 months for any Interest rate rise to have an effect!