BOE MPC September minutes - Moving towards further QE

worldtraveller

The Bank of England's Monetary Policy Committee came close to voting for more bond purchases at its September meeting, as economic growth appeared set to be "materially weaker" than they had forecast as recently as August.

Although only Adam Posen voted for an increase in purchases of government bonds under a stimulus program known as quantitative easing, it seems increasingly likely that he will be joined by a majority of his fellow members in the next few months.

According to minutes of the MPC's meeting Sept. 7 and 8, while the remaining eight members decided that the time to provide additional stimulus hadn't yet arrived, they were increasingly leaning in that direction.

WSJ

31 Other members judged that it was appropriate to maintain the current stance of policy at this meeting. The current weakness of demand growth was likely to persist for longer than suggested by the central case in the August Inflation Report. This meant that the balance of risks to inflation in the medium term was likely to have shifted further to the downside. Most of these members thought that it was increasingly probable that further asset purchases to loosen monetary conditions would become warranted at some point.

33 The Governor invited the Committee to vote on the propositions that:

Bank Rate should be maintained at 0.5%;

The Bank of England should maintain the stock of asset purchases financed by the issuance of
central bank reserves at £200 billion.

Regarding Bank Rate, the Committee voted unanimously in favour of the proposition.

Regarding the stock of asset purchases, eight members of the Committee (the Governor, Charles Bean,
Paul Tucker, Ben Broadbent, Spencer Dale, Paul Fisher, David Miles and Martin Weale) voted in
favour of the proposition. Adam Posen voted against the proposition, preferring to increase the size of

the asset purchase programme by £50 billion to a total of £250 billion.

BOE MPC Minutes (pdf)

As I expected, looks like further QE is likely later this year, maybe even as early as next month, with Posen leading the charge.

ILW

They really have decided to go down the inflation route by the sound of things.

DervProf

Whatever route they take, I am reasonably confident that it will be the wrong one, given there recent track record.

Graham_Devon

I'm sure one of the BBC bloggers suggested further QE would be a disaster waiting to happen a few months back.

So it seems it's the natural thing to do

This time though, we want £500bn. Oh, and Hamish want's cheques writing to every household. Though I suppose that should be a monthly cheque rather than a one off. That should sort any problems we have out.

Turnbull2000

http://ftalphaville.ft.com/blog/2011/09/21/682136/uk-qe2-coming-down-the-slipway/

A new round of QE is pretty much certain IMO. The only question left is whether interest rates will be cut to 0.25% - a move the BoE are now weighing up.

Is it fair to assume these developments will be good for property and bad for pensions?

OptionARMAGEDDON

S0d the pensioners. They have had it too good for too long. They arent going to grow this country out of recession, they are the lame that will prolong the recession.

I also hope the boomers realise the young they screwed are going to be in power when they are in retirement and dribbling pea soup.

ILW

The "Young" spend too much time whinging to actually do anything.

They should be out there setting up businesses and growing the economy like their parents did, but they seem to just expect handouts.

sarkin1

parents did not grow the economy they mewed and now there is nothing left

shortchanged_2

Turnbull2000 wrote: »

The only question left is whether interest rates will be cut to 0.25% - a move the BoE are now weighing up.

And how exactly is that going to solve anything?

Jesus, if the economy can't be stimulated with interest rates at 0.5% then there's no hope.

It's about time some people faced up to reality and that recession is now inevitable, whatever they try now.

Heyman_2

worldtraveller wrote: »

As I expected, looks like further QE is likely later this year, maybe even as early as next month, with Posen leading the charge.

From the wording of the minutes that you've quoted, it seems that they are certainly considering it although I don't see what difference a month or two would make i.e. why didn't they just vote for it now?

Unless they are waiting to see some other figures due before the end of the year?

ILW

sarkin1 wrote: »

parents did not grow the economy they mewed and now there is nothing left

Don't talk rubbish, the majority companies in the UK were set up within the last 50 years. Many by people who left school at 15 or 16 and just got on with it.