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Bank has become ‘addicted’ to QE and must outline risks, warn Lords July 16, 2021, 12:06 am
The Bank of England has become “addicted” to quantitative easing and must spell out the risks of its bond-buying programme and plans to wean itself off it as inflation rockets, a Lords committee has warned
The Bank of England has become “addicted” to quantitative easing and must spell out the risks of its bond-buying programme and plans to wean itself off it, a Lords committee has warned.
A report by the Economic Affairs Committee calls on the Bank to become more transparent over its use of quantitative easing (QE), as it warns the £895 billion programme may be sending inflation spiralling and become a “serious danger” to public finances.
Background
The role and economic influence of the Bank of England has grown substantially since the global financial crisis, as have expectations that it will intervene in periods of economic uncertainty. The trend for interventionist monetary policy continued during the COVID-19 pandemic, and led to the doubling of the UK’s quantitative easing (QE) programme.
The Economic Affairs Committee launched this inquiry for several reasons:
the quantitative easing programme has not been subject to sufficient scrutiny, including in Parliament, given its size, longevity and economic importance.
to examine the extent to which quantitative easing has achieved its stated objectives, along with its effects on the real economy, growth and inflation.