One Down, One To Go

March 6, 2009 by admin

One down, one to go.

Yesterday proved to be eventful, to say the least, as the Bank of England formally adopted QE, announcing that they could purchase up to £100 billion Gilts and £50 billion private-sector bonds as a new way of prosecuting monetary policy. It’s hard to believe that it was only three months ago that the Bank “saw the light” about the state of the UK economy and the global financial system? You can’t say that they haven’t made up for lost time!

Amusingly, readers of the FT can find commentary that the Bank has either done too much (Martin Wolf) or not enough (Willem Buiter.) When everyone disagrees with you, that’s usually a sign that you’ve done the right thing. Certainly the Gilt market likes it; 10 year yields have plummeted 50 bps since the announcement.