Home
News
In Focus
Business
Metro
Nation
World
Sports
Feature
Opinion
View more »Opinion Columns
Wan LixinOpinion deputy editor of Shanghai Daily
Restaurants get off to a quick start thanks to game-changing policies
High service charges on event ticket refunds call for further regulation
Sunday
- Subscribe
BOE decision shocks market
By David Milliken and Matt Falloon |
August 7, 2009, Friday
|
Print Edition
Print Edition
THE Bank of England took a far bigger step than expected to boost Britain's recession-hit economy yesterday, stunning markets by expanding its quantitative easing plan to 175 billion pounds (US$294 billion) from 125 billion pounds.
The central bank said Britain's downturn appeared to have been deeper than previously thought and, while the trough in output was near and some recovery was on the way, tight credit conditions would remain a considerable drag.
The decision shocked many investors who had been starting to take a brighter view of the British economy, especially after recent economic data suggested the year-long, steep recession may have ended in the third quarter.
Economists had been evenly split on whether the BOE would increase its quantitative easing scheme, completed last week, or pause to gauge what impact it was having.
Few if any had forecast an expansion above the original government-set limit of 150 billion pounds.
"This is a huge surprise," said Ross Walker, UK economist at Royal Bank of Scotland. "All the rhetoric seemed to point to not doing very much more, even up to 150 (billion) seemed odds-against after the better (economic) surveys."
The pound fell more than a cent against the United States dollar and gilt futures rocketed higher after the BOE's decision, which also saw interest rates at a record low of 0.5 percent.
Markets will now await the central bank's quarterly inflation forecasts - due next Wednesday - for a further explanation of the decision.
"I would not say this is the end of it - if they decide in three months the economy still needs more stimulus they might actually do more," said Jonathan Loynes, chief UK economist at Capital Economics.
The central bank said Britain's downturn appeared to have been deeper than previously thought and, while the trough in output was near and some recovery was on the way, tight credit conditions would remain a considerable drag.
The decision shocked many investors who had been starting to take a brighter view of the British economy, especially after recent economic data suggested the year-long, steep recession may have ended in the third quarter.
Economists had been evenly split on whether the BOE would increase its quantitative easing scheme, completed last week, or pause to gauge what impact it was having.
Few if any had forecast an expansion above the original government-set limit of 150 billion pounds.
"This is a huge surprise," said Ross Walker, UK economist at Royal Bank of Scotland. "All the rhetoric seemed to point to not doing very much more, even up to 150 (billion) seemed odds-against after the better (economic) surveys."
The pound fell more than a cent against the United States dollar and gilt futures rocketed higher after the BOE's decision, which also saw interest rates at a record low of 0.5 percent.
Markets will now await the central bank's quarterly inflation forecasts - due next Wednesday - for a further explanation of the decision.
"I would not say this is the end of it - if they decide in three months the economy still needs more stimulus they might actually do more," said Jonathan Loynes, chief UK economist at Capital Economics.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
