BoE signals retreat from quantitative easing

BoE signals retreat from quantitative easing
Published: 17 July 2013
The Bank of England's interest rate-setting committee signalled on Wednesday that it was retreating from quantitative easing as a means of stimulating the economy, preferring a more "mixed" strategy including guiding markets.

The minutes of the July Monetary Policy Committee meeting said that financial markets had prematurely withdrawn stimulus from the economy in June and the immediate priority for maintaining economic recovery was to counter these market moves.

The emphasis on guiding markets in the first set of minutes under new governor Mark Carney showed the BoE was moving away from QE as its preferred strategy.

Instead, the nine members of the MPC focused on guiding markets and voted unanimously to hold interest rates at 0.5 per cent and leave the stock of assets purchased under the quantitative easing programme at £375bn.

The MPC noted that "market interest rates had risen sharply internationally" reflecting a change in perceptions over US monetary policy and the movement higher of short-term market interest rates "represented an unwelcome tightening in monetary conditions that, were it to persist, would risk hampering the emerging recovery".
- FT

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