Last week an important anniversary passed quietly by. It is a year since the
Bank of England started its programme of asset purchases, generally referred
to as Quantitative Easing (QE). Over the year, the Bank has bought £200bn of
assets, mainly government bonds (gilts). Has this policy worked?
One of the world’s largest sovereign wealth funds has given Britain its vote
of confidence by pledging to buy Government debt this year.
Friday’s note from Charles Dumas of Lombard Street Research brings a rather neat, if sadly wholly fictitious, catch-all deal for the week’s news. Greece, Goldman, gilts……
UK public spending has become a hot topic in recent weeks.
With an election looming, sovereign jitters hovering over Europe, plus renewed speculation over the possibility of…
Debt chief says investors have enough faith in UK to keep buying gilts even if
there is a hung Parliament or when the BoE starts to unload its £200bn
bonds.
George Osborne’s 2010 Mais Lecture on Wednesday may not prove as memorable as
Nigel Lawson’s 1984 monetarist blueprint, but it was significant in
preparing us for what to expect should the Tories win the election.
British gilt futures rallied on Tuesday after Mervyn King, the Bank of England
governor, suggested there could be more quantitative easing to come.
Gilts yields jumped and the pound fell on news that public spending rose and
tax receipts fell sharply last month as the UK recorded a shock £4bn deficit.
The yield on Britain’s 10-year gilt just shot up to about 4.2 per cent, according to Reuters data.
Unfortunately you can’t see it in the below Bloomberg charts, since…
Economists’ predict inflation rate of 4pc, prompting concerns about a decrease
in Britons’ living standards.
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