The Bank of England Thursday prematurely halted it’s Quantitative Easing program at £375 billion, ending it’s QE3 early. Governor King stated he has no plans for further bond purchases, and that the BOE will shift their focus to stimulating bank lending.
Apparently all of Europe including the UK will now allow Uncle Benny and the inkjets to perform their dastardly counterfeiting for them.
As Bloomberg reports:
The nine-member Monetary Policy Committee led by Governor Mervyn King kept its target for asset purchases at 375 billion pounds ($598 billion) today, ending its third round of quantitative easing. The decision was forecast by 35 of 45 economists in a Bloomberg News survey. The remainder had forecast an increase of as much as 50 billion pounds.
Today’s move suggests the London-based central bank may focus on credit-boosting initiatives such as the Funding for Lending Scheme to ignite growth. Increased inflationary pressures may also have prompted policy makers to hold fire even as surveys point to renewed weakness after the U.K. economy surged 1 percent in the third quarter.
BOE Deputy Governors Paul Tucker and Charles Bean both suggested in recent speeches that asset purchases may no longer have the same impact on the economy as when first introduced in 2009. At the same time, Martin Weale has questioned whether loosening policy is right with inflation above the central bank’s 2 percent target.
The UK’s pause not withstanding, QE will go to infinity on both sides of the pond, whether officially announced as such, or as unannounced behind closed doors. A true abrupt cessation of QE would cause the greatest financial collapse the world has ever witnessed within weeks.