Bank of England Expected to Expand QE Scheme

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Bank of England Expected to Expand QE Scheme

Fri, 30 Oct 2009

The Monetary Policy Committee (MPC) is expected to extend its quantitative easing programme next week after the Bank of England announced yesterday that it has reached its £175 billion limit in asset purchases. Financial analysts are now predicting a significant expansion of the scheme, with two thirds of economists interviewed in a Reuters survey anticipating an extension of at least £25 billion, and others expecting a £50 billion increase.

Chief economist at Citigroup bank, Michael Saunders, said that the lack of funds being raised by the UK's corporate businesses will probably lead to the MPC deciding in favour of the quantitative easing extension.

While the quantitative easing scheme has been seen as a success in most quarters, last week's revelation that Britain remains in recession came as a surprise to many financial experts. Consumer credit also fell for the third consecutive month in December as consumers look to pay off their debts rather than secure further loans . Indeed, credit card borrowing fell to a nine month low of £79 billion in September, while there was also a net repayment of £341 million on other forms of credit .

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