Bank of England forced to increase quantitative easing program
Today's announcement by the Bank of England that a further £50 billion would be pumped into the UK quantitative easing program is one which was very much out of the banks control. With UK lending at rock bottom, consumers struggling to pay off their debts and UK businesses going to the wall on a weekly basis, the situation is now critical. There had been hopes that the quantitative easing program of the last few months would see UK banks follow suit and pump more money into the UK economy but unfortunately this has not happened.
The longer the quantitative easing program goes on the more risk than when the UK finally does come out of recession there could be a serious problem with inflation. Whether the Bank of England will be quick enough to increase interest rates to subdue lending, as and when the economy improves, remains to be seen but this is potentially a very critical and very difficult situation to manage. With an election due next year the UK government had hoped for better news on the economic front although unfortunately after today's announcement they may have to wait some time.
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