Bank of England faces big dilemma
This Thursday will see the next meeting of the Bank of England's monetary policy committee amid expectations that the quantitative easing program will be brought to an end having invested a full £200 billion. This places the Bank of England in a very difficult situation because there are fears in the marketplace that a sudden withdrawal of the quantitative easing program could see the UK economy relapse back into recession. So what are the options?
While the Bank of England is independent of the government of the day there will obviously be political pressure to reinstate or increase the quantitative easing program to cover the period of the election. There is no doubt that Gordon Brown would rather have the support of the quantitative easing program for the UK economy but whether Mervyn King will agree to this remains to be seen.
It is becoming more and more apparent that the UK government and the Bank of England are not seeing eye to eye and Mervyn King recently backed Pres Obama against Gordon Brown in relation to new banking sector revenue initiatives. However, as we have seen in the past, the monetary policy committee meetings can sometimes take off in a different direction to that assumed by economists in the UK.
Share this..
Related stories
UK government and Bank of England see upturn in UK economy
The UK government and the Bank of England have today issued a statement confirming that the UK economy is in fact in a recovery phase but vitally they have both agreed that the ongoing stimulus package needs to remain for the foreseeable future. This is something of a bitter blow to analysts who believed that the UK economy was over the worst and in fact well positioned to withstand a withdrawal o...
Read MoreAnother day another U-turn on bank bonuses!
Despite the fact that the UK government has continued to attack the UK financial sector with salaries and bonuses in particular coming under significant pressure, Lord Mandelson has today signalled a possible U-turn by the authorities. Yesterday we saw Royal Bank of Scotland directors suggest that if the government rejected a potential £1.5 billion bonus pot for the current year then the director...
Read MoreGender pay gap 'needs tackling'
More must be done to close the pay gap between men and women, a gender equality campaign group has said.The Fawcett Society makes its call on the first day of the Wimbledon tennis championships, which will be the first in its history to pay the tournament winners equally.Dr Katherine Rake of the Fawcett Society said: "Women tennis players are finally enjoying equal pay at Wimbledon - it's time for...
Read MoreIMF warns again on UK economy
The International Monetary Fund (IMF) has reiterated its 0.2% growth forecast for the UK economy in 2010 although there is a stark warning that the position could deteriorate very quickly unless lending activity improves. This is not the first time that the IMF has criticised the UK authorities and the UK financial sector for a lack of follow-through on various lending promises. However, while man...
Read More