Bank votes for quantitative easing

---

Policymakers at the Bank of England have signalled their support for quantitative easing - the modern equivalent of printing money.

Writing to the chancellor to allow the bank to expand the money supply was voted for unanimously by the nine-member Monetary Policy Committee MPC.

This could see the central bank buying up corporate and government bonds within days.

Meeting minutes from the Bank's also revealed that the MPC voted 8-1 to reduce interest rates to one per cent this month.

The slashing of the Bank's lending rate - it stood at over five per cent a year ago - is due to the bank's concern about the lack of lending to consumers and businesses in the credit crunch.

Support for quantitative easing among the policymakers suggests that there is now an appetite to try alternative measures rather than rate cuts.

Andrew Goodwin, senior economic advisor to the Ernst & Young Item Club, commented: "The most important aspect of today's minutes was the unanimous vote to write to the chancellor to seek his consent to implement quantitative easing.

"Item believes that it is crucial that the Bank be allowed to swiftly and boldly implement this policy."

---

---

Back

2009-02-19 12:50:39 © Moneyextra.com