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Bank of England Going Easy on its Quantitative Easing Scheme

in International Business

Bank of England Going Easy on its Quantitative Easing Scheme

Bank of England has decided to hold off from taking any further Quantitative Easing (QE) measures and has kept interest rates unchanged, maintaining it at the historic law of 0.5%.

Through QE central banks increase the supply of money by “printing” more money into the system. In practice this is done by purchasing government bonds or other categories of assets, using the new money which is typically issued in the form of a deposit at the central bank. The idea is to add more money into the system, which depresses the value of the currency, and to push up the value of the assets being bought and to lower longer-term interest rates, which encourages more borrowing and investment.

The total value of the Bank’s QE now stands at 375bn Euros, with last month’s QE being 50bn Euros.

The Bank of England is holding off its QE measures for this month to see the impact of last month’s increase in QE funds.

However, the outlook for the UK economy remains fragile, showing a disappointing GDP figure in the second quarter, down 0.7%.

“But we think the GDP was heavily distorted by the extremely poor weather and the extra bank holiday in June, “ said Adam Chester, head of UK macroeconomics at Lloyds Bank Corporate Markets.



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