Is it sensible to extend the quantitative easing program?
Today we are waking up to the news that the Bank of England is seriously considering extending the quantitative easing program and pumping more money into the UK economy. This comes at a time when many observers, investors and taxpayers had begun to become more positive on the UK economy, but this weekend's revelations will be a setback for many. So is it sensible to increase the quantitative easing program at this stage?
There is no doubt that the UK economy is still in its sickbed even if there are signs of recovery and stabilisation. Rather than take the risk of withdrawing the quantitative easing program too early, and risking a serious relapse, it makes sense to err on the side of caution and at least retain the support given by the quantitative easing program in the short term. However, this does bring the Bank of England into the realms of political shenanigans with the election just around the corner, prompting claims of favouritism in favour of the Labour Party.
However, the Bank of England has in the past steadfastly refused to become involved in political manoeuvrings and indeed Mervyn King, the Governor of the Bank of England, has actually stood up to the UK government on many occasions.
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