Bank economist: QE is showing positive signs
IT MAY be too soon to judge precisely how effective the Bank of England’s quantitative easing (QE) programme has been but there are already early positive signs, the BoE’s chief economist Spencer Dale said in a speech yesterday.
“It is still early days in terms of judging the ultimate success of the programme in stimulating nominal spending, but initial indications remain encouraging,” said Dale.
Gilt yields initially fell sharply following the announcement of the asset purchasing programme but have subsequently drifted back up. Yields on UK 10-year gilts are now at 3.74 per cent but Dale said this reflects a range of other factors and it is likely that yields are lower than they would have been without QE.
Since March the Bank has purchased £96bn of government bonds out of the £125bn planned and the £150bn authorised by the Treasury.
Dale also responded to criticism that the impact of QE was limited because of purchases by foreign investors.
“Even if that is the case, it does not mean the asset purchases will not have any economic benefit. Rather, more of the effect will come through a lower exchange rate,” he said.