The Bank of England has redeployed her version of QE 2.0
From Bloomberg,
The Bank of England expanded its bond-purchase plan for the first time in almost two years as government budget cuts and Europe’s debt crisis jeopardize Britain’s economic recovery.
The nine-member Monetary Policy Committee led by Mervyn King raised the ceiling for so-called quantitative easing to 275 billion pounds ($421 billion) from 200 billion pounds. Twenty- one of 32 economists in a Bloomberg News survey forecast no change, and the rest predicted increases ranging from 50 billion pounds to 100 billion pounds. The bank expects to complete the new round of purchases in four months.
The yield on the U.K.’s 10-year government bond dropped after the announcement, falling to as low as 2.228 percent from 2.352 percent before the statement. The central bank said slowing global growth and the turmoil in Europe “threaten the U.K. recovery.” It also said it is now “more likely” that inflation will undershoot its 2 percent goal in the medium term.
The MSCI All-Country World Index slid into a bear market last month as European officials tried to contain a crisis that the International Monetary Fund said presents “acute” risks to the global economy.
Again note of the use of crisis in order to rationalize political action.
Well, readers of this blog have seen this coming.
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