Do the Bank of England know something we don't?
Last week's revelation that Mervyn King, Gov of the Bank of England, is prepared to inject yet more funds into the UK government's quantitative easing program caught many analysts by surprise. At a time when the UK economy appears to be turning a corner it is Mervyn King who has all of a sudden turned very negative on the UK economy. So does the Bank of England know something we don't?
There are growing concerns that the UK government and the Bank of England are aware of very recent economic trends which would indicate the situation regarding the UK economy is worsening. The request to increase the UK government's quantitative easing program is very damaging to the short term outlook for the UK economy and could be the start of a very difficult phase of economic activity in the UK.
Even though the Bank of England would be obliged to release any negative data which they were aware of as soon as possible, to reduce any conflict of interests, they will certainly be more aware of very short-term trends than the UK public, businesses and analysts. All we can do at this moment in time is sit back and hope that the worst is actually over!
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