Bank of England to inject another £25bn in 2010

It seems that the Bank of England is prepared to continue with their Quantitative Easing program by as much as £25bn in the New Year. The BoE has already put in £200bn into the UK economy through this system already.

The bank believes it will still be safe to do so without provoking a new burst of inflation despite the fact that consumer prices have started to rise. They will need to seek Alistair Darling consent to this, however in his Pre-Budget report he made clear that it is his view that it is too early to withdraw all government support for recovery.

The creation of new money mainly is to buy up gilt-edged stocks from institutional holders. The Bank appears to believe the lesson from 1990s Japan was that it failed to act decisively enough in the face of crisis and turned to QE too late in the economic cycle.

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