Quantitative strategy 'needs more force'
Apr 06 2009
The Bank of England needs to implement its quantitative easing policy more forcefully, as there is no room for further reductions in interest rates, the British Chambers of Commerce (BCC) claims.
David Kern, chief economist at the organisation, says that the Bank's Monetary Policy Committee (MPC) is unlikely to cut the interest rate at the meeting on Thursday, as it currently stands at a historic low of 0.5 per cent.
It is widely expected that the rate will remain at its current level, with economists from financial institutions such as Barclays Capital, IHS Global Insight and the Royal Institution of Chartered Surveyors predicting no change.
Kern adds that the MPC has unveiled quantitative easing to be its main monetary tool, increasing the importance of this policy being communicated more clearly and pursued more forcefully.
Kern adds that the MPC has unveiled quantitative easing to be its main monetary tool, but claims the group needs to pursue it more forcefully and communicate its importance more clearly.
He explains: 'The Bank should avoid creating market uncertainties over the strength of their commitment to pursuing quantitative easing transparently, aggressively and over a long period of time.'
The expert calls on the MPC to outline the rate of money supply expansion it intends to achieve and recommends that the UK's key sectors are the focus of this policy.
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