Quantitative Easing

11 Pages Posted: 17 Jun 2009

See all articles by Stuart Berry

Stuart Berry

Bank of England - Monetary Analysis

James Benford

Bank of England

Kalin Nikolov

European Central Bank (ECB)

C. H. Young

affiliation not provided to SSRN

Mark Robson

Bank of England

Date Written: June 12, 2009

Abstract

The Monetary Policy Committee’s recent decision to expand the money supply through large-scale asset purchases (or ‘quantitative easing’) shifted the focus of monetary policy towards the quantity of money as well as the price of money. With Bank Rate close to zero, asset purchases should provide an additional stimulus to nominal spending and so help meet the inflation target. This should come about through their impact on asset prices, expectations and the availability of credit. However, there is considerable uncertainty about the strength and pace with which these effects will feed through. That will depend in part on what sellers do with the money they receive in exchange for the assets they sell to the Bank of England and the response of banks to the additional liquidity they obtain. The MPC will be monitoring a range of indicators in order to assess the impact of its asset purchases and therefore judge the appropriate stance of monetary policy.

Suggested Citation

Berry, Stuart and Benford, James and Nikolov, Kalin and C H, Young and Robson, Mark, Quantitative Easing (June 12, 2009). Bank of England Quarterly Bulletin, Q2, 2009, Available at SSRN: https://ssrn.com/abstract=1420042

Stuart Berry (Contact Author)

Bank of England - Monetary Analysis ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom

James Benford

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Kalin Nikolov

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Young C H

affiliation not provided to SSRN ( email )

Mark Robson

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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