Again as predicted, central banks of major economies has been accelerating policies of inflationism with more asset purchases or Quantitative Easing (QE).
The Bank of England (BoE) adds £ 50 billion to her existing program
The Bloomberg reports,
Bank of England officials pumped another 50 billion pounds ($79 billion) into the U.K. economy to protect a nascent recovery from the threat posed by Europe’s debt crisis.
The nine-member Monetary Policy Committee raised the target for bond purchases to 325 billion pounds, more than a quarter of current outstanding gilts, according to a statement in London today. The increase was forecast by 34 of 50 economists in a Bloomberg News survey. Fifteen economists forecast a 75 billion- pound increase and one no change. The MPC also held its benchmark interest rate at a record-low 0.5 percent.
“A gradual strengthening of output growth later this year should be supported by a gentle recovery in household real incomes as inflation falls, together with the continued stimulus from monetary policy,” the central bank said. “But the drag from tight credit conditions and the fiscal consolidation together present a headwind. The correspondingly weak outlook for near-term output growth means that a significant margin of economic slack is likely to persist.”
The stimulus expansion suggests policy makers remain concerned that Europe’s failure to stem its debt turmoil poses a risk to Britain. While U.K. services, manufacturing and construction all showed growth in January, the government’s budget squeeze and rising unemployment are acting as a drag on growth and officials forecast that inflation will slow to below their 2 percent target by the end of this year.
What allegedly has been meant for the economy is in reality a policy booster or protection for the beleaguered banking industry. Global central bankers will push inflationism to the limits until the markets forces their hands.
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