Bank of England goes on the offensive
The Bank of England today invited a number of City analysts to a "teach-in" with regards to the UK quantitative easing program which will in the end see £175 billion injected into the UK financial system. A number of economic indicators over the last few days would seem to show that quantitative easing is not working, or at best having less of an impact than the Bank of England had hoped, something which has caused some concern in investment circles.
However, the Bank of England believes that the quantitative easing program has had a positive impact on the UK financial sector ultimately reducing the yield on gilts which has encouraged more and more investors to look elsewhere for potential growth. A number of analysts appear to be suggesting that the quantitative easing program has failed simply because lending figures still remain relatively low, when in reality this is purely and simply down to the strategy of UK banks.
As we have mentioned on numerous occasions over the last few days, the Bank of England, and in particular Mervyn King, has come in for significant criticism over the last week or so due to differing opinions and differing indications regarding the strength of the UK economy. This has led to a short-term "run" on the pound although this "media blitz" by the Bank of England would appear to be an attempt to at least quell concerns and highlight the positives of the UK economy at the moment. But will it be successful?
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