In a paper last year, Martin Weale, a member of the Bank’s Monetary Policy Committee said the QE programme added about 3% or £50bn to the overall level of GDP since it was first introduced. QE did not tackle the problem of poor access to loans for small and medium sized companies struggling to stay afloat and keep on workers, they said.īut the scheme’s supporters say the economy would probably have been smaller and asset prices lower without such an unconventional loosening of monetary policy. But it also argued everyone had benefitted thanks to the boost to the overall economy and therefore also to jobs.īusiness groups also complained that by focusing on buying government bonds rather than corporate bonds, the Bank did little for the real economy. The Bank itself said that wealthy families had been the biggest beneficiaries of QE thanks to the resulting rise in value of shares and bonds. The Bank has faced the charge that QE has exacerbated inequality, partly by helping banks in handing them big amounts of money while doing little to support small firms and households. Six years on, the debate rages over whether QE was the best, or the fairest, way to steer Britain out of the credit crunch. The Bank later increased the total to £375bn. Then in October 2011, faced with growing warnings of a double-dip recession and a eurozone crisis, policymakers voted to resume QE and pump another £75bn into the financial system, increasing the QE budget to £275bn. At the same time it cut interest rates to a record low of 0.5%.īetween March 2009 and January 2010 the Bank bought £200bn of assets, equivalent to about 14% of GDP to help breathe life into the UK economy following the credit crunch. The Bank of England launched its QE programme in March 2009 with an initial spending target of £75bn over three months. The Bank of England has argued QE helped growth and the jobs market, but it also concedes the scheme did more for wealthier households. Its vast bond-buying programme took the balance sheet from about $870bn in August 2007 to $4.5tn today. QE also swelled the Fed’s balance sheet enormously. Quantitative easing, coupled with low interest rates, freed up capital in the US and encouraged a steady rise in risk appetite, helping US shares prices to rise markedly since 2009. But it committed to keeping record low interest rates for “a considerable time”. After more than five years the Fed, now led by Janet Yellen, called time on its QE programme last October. When it was launched under then Fed chairman Ben Bernanke – dubbed “Helicopter Ben” for his desire to drop money out of the sky – it was, and remains, a contentious policy decision.Īs the US backdrop steadily improved in the aftermath of the Fed’s cash injection, the central bank gradually slowed its bond-buying programme from $85bn a month to $15bn a month. The Federal Reserve embarked on QE in November 2008 with the hope of steering the world’s largest economy through the depths of the financial crisis. Former Federal Reserve Chairman Ben Bernanke launched the US version of QE in late 2008.
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