Surprise move by Bank of England !!!

8/6/09

Recent polls by Bloomberg and a Shadow MPC report calling for an end to QE from the Bank of England are way off the mark with the Bank of England announcing this morning that not only will they extend the QE programme, but also double the expected GBP25B addition to GBP50B. This takes the total programme to GBP175B. The MPC has said that the world economy remains in recession, despite increasing signs that the output in the UK’s export market is stabilizing, and that financial markets are still fragile even with noticeable improvements. This has weighed tremendously on Sterling across the board, and could very well set the tone for the day. Rates were left unchanged at 0.50% as expected.

My comments: Wow. Bank of England is increasing the failed move again to put addition money into qualitative easing. That act is telling everyone that they are still in very very bad shape. Also, their view of the world economy is still remains in recession. Will next week our US Fed would catch on the same conclusion? Should we reduce the QE or follow England?? I would say Fed has to keep what they are doing(Even though I think it is not working well), there no interest rate adjust until next year(Actually, I would say they never have a chance to consider to raise interest rate again). They will keep purchase government bonds period!!