Bank of England awaiting news on quantitative easing
The Bank of England has this week reiterated the fact that while £125 billion of UK taxpayer's money has been pumped into the UK financial system there are as yet no signs of success. However, the MPC is of the opinion that an improvement in the short-term prospects of the UK economy has occurred directly as a consequence of the quantitative easing program although how much of an impact this has had will only become clear in the weeks and months ahead.
It was interesting to see that the Bank of England decided against increasing the quantitative easing fund until its next meeting in August with many believing that the MPC is remaining very cool on the situation despite being a little more upbeat behind-the-scenes. There is also a growing belief that the UK economy is better poised for the second half of 2009 than previously thought and the prospect of inflation becoming an issue on the upside is worrying yet encouraging at the same time.
As we have mentioned are numerous occasions, the short-term economic indicators for the UK have been in turmoil over the last few months, giving differing views on the current and potential future state of the UK economy. Until we see more trends appear it will be difficult to say with any confidence whether the economy has turned.
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