When cuts are not enough
Explaining the Bank of England’s newest wheeze
AS THE post-referendum economy wobbles, the Bank of England is acting to prop it up. On August 4th, when it cut the base rate of interest to 0.25%—the lowest in its 322-year history—it also announced a new round of quantitative easing (QE), or printing money to buy bonds. The new round had a shaky start. On August 9th the bank bought fewer gilts than it had hoped, a reflection of illiquidity in long-term-debt markets and thin summer trading. Even when completed, the effect will be marginal: the £60 billion ($78 billion) in new QE is small compared with the £375 billion the bank had already amassed.
This article appeared in the Britain section of the print edition under the headline “When cuts are not enough”
From the August 13th 2016 edition
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