Blockbuster Cash Boost from Bank
Byline: Sam Fleming
BRITAIN's 'quantitative easing' efforts could surpass those of Japan and the US, analysis showed in the wake of yesterday's unprecedented Bank of England announcement.
The Monetary Policy Committee voted to reduce the Bank Rate to an unprecedented low of 0.5pc, while giving a strong signal that rates will fall no further.
More importantly, the Committee fired the starting gun on a money-creation programme that could be worth [pounds sterling]150bn.
It will purchase around [pounds sterling]75bn of bonds over three months, with a potential [pounds sterling]75bn to follow.
Up to [pounds sterling]100bn of the cash could be spent on UK gilts, meaning the Bank will effectively be helping finance the government's yawning deficit by printing more money.
There is nothing to stop the Bank from going back to the Treasury and seeking authorisation to buy yet more bonds as it continues its Quantitative Easing (QE) programme.
Calculations by Citigroup suggest that the Bank's efforts already surpass those of Japan earlier this decade and the US Federal Reserve during the current crisis.
Although comparisons are not easy to make, the peak levels of QE reached in Japan and the US amounted to 4.7pc of gross domestic product. In Britain the initial [pounds sterling]75bn of asset purchases announced yesterday equals 5. …