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Bank of England split over quantitative easing

Minutes from the November monetary policy committee meeting show that for the first time since March there were three different voting strategies in place. Some voted for an increase in quantitative easing, one voted for a decrease in quantitative easing and one voted to suspend the program. The majority, seven members, voted for a £25 billion increase which was eventually passed and put into action.

More than anything this indicates there was and is a split within the MPC regarding quantitative easing and the impact which it is having on the economy. In many ways this reflects the differing opinions within the analytical marketplace where many researchers are concerned about more money being thrown into what is effectively a bottomless pit. So what next?

The additional £25 billion takes the quantitative easing fund to £200 billion and is highly likely to be the last increase we will see. In many ways, the quantitative easing program has created a foundation for the future and while it has had little visible impact on the UK economy in the short term there are sure to be longer term benefits. The UK government and the Bank of England are now committed to the program and must see it through to the bitter end.

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