Panic stations: Bank’s unanimous vote on QE bodes ill
Crikey. Batten down the hatches. Stock the nuclear bunker. Don your hard hats. Britain’s economic prospects have worsened so much in the past month that eight of the Bank of England’s nine rate-setters, who were happy to leave quantitative easing (QE) unchanged at £200bn in September, were rushing to add another £75bn just 30 days later.
By Philip Aldrick
As if that wasn’t shocking enough, the minutes to this month’s Monetary Policy Committee (MPC) meeting showed it could have been even more.
“Some members” discussed a £100bn helicopter drop. One of the “some” was almost certainly Adam Posen, who had been calling for an extra £50bn for a year, but the others were – until very recently – happy enough with the status quo.
A unanimous one-month turnaround. If that doesn’t spell impending disaster, what does? Sir Mervyn King, the Bank’s Governor, sought to explain why at the Institute of Directors last night. “Without monetary stimulus – low interest rates and large asset purchases – there is a risk that growth will stall,” he said. There you have it. Britain risks falling back into recession.