United kingdom Daily news: Bank of England poised to start printing money again

Minggu, 01 Juli 2012

Bank of England poised to start printing money again

Bank of England poised to start printing money again

By Dan Atkinson

PUBLISHED: 10:37 EST, 1 July 2012 | UPDATED: 10:37 EST, 1 July 2012

The Bank of England is expected to restart the printing presses this week, creating as much as Â£50billion of new money.

Spooked by the crisis in the eurozone and by fears that the double-dip recession could last for at least another quarter, the nine members of the Bank's Monetary Policy Committee are likely to give the green light to more quantitative easing.

Expectations vary from Â£25billion to Â£50billion, on top of the Â£325billion already created.

Pressure: Governor of the Bank of England Mervyn King pictured in February 2011

Nothing on this scale has been attempted in peacetime. In the long term it may bring new, unknown risks.

But last week's confirmation that gross domestic product shrank 0.3 per cent in the first quarter of this year may have set the seal on more quantitative easing when the MPC meets on Wednesday and Thursday.

It has been suggested that it will cut the official interest rate - at an alltime low of 0.5 per cent - to 0.25 per cent, though this would be a token gesture to stimulate the economy and would harm already hard-hit savers.

Under quantitative easing, the Bank creates money out of nothing and uses it to buy securities, mainly Government bonds, from private investors, thus pumping money into the economy.

The European Central Bank will also meet on Thursday, with a quarterpoint cut in the eurozone's official interest rate to 0.75 per cent expected.