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I thought this might cheer you up Mega. Merv thinks it is time to get creative with the money supply. Good idea, don't you agree?
The pound slid sharply against all other world currencies after the Bank of England Governor said on Wednesday he is poised to embark on "unconventional measures" to pump cash into the economy as soon as this week.
Mervyn King said the Bank would start buying commercial paper this week, and would most probably move on to full-scale quantitative easing, which involves buying securities but printing money to pay for it, before long.
In a further surprise, Mr King said the Bank was prepared to buy government debt in an effort to bring the economy back on track - something which, so far, neither the Federal Reserve or European Central Bank has embarked on.
He said: "The projections imply that further easing in monetary policy may well be required. That is likely to include actions aimed at increasing the supply of money in order to stimulate nominal spending," adding that the Bank would consider buying gilts - government bonds - as part of the scheme.
The news - alongside a Bank economic forecast which was far more pessimistic than many City analysts - sent the pound careering downwards against other currencies.
Sterling dropped by well over 3 cents against the dollar to $1.4352, and the euro was up more than a penny against the pound to 89.89p. The pound's fall coincided with sharp falls in gilt yields, indicating that traders had bought more of the government bonds in anticipation of the Bank's unconventional measures. [always one step ahead, eh?]
The Bank's Inflation Report predicted the biggest undershoot of the Monetary Policy Committee's 2pc consumer price index target in its history, warning that unless more is done to stimulate the economy, CPI will drop to around 0.5pc later this year.
City economists took this as a sign that the Bank will cut rates even further below their current 1pc rate in the coming months - as well as embarking on unconventional measures. It came as a surprise to some economists, who [were asleep at the wheel?] assumed that the MPC had little leeway to cut rates.
Bank of England will buy gilts to boost economy
The pound slid sharply against all other world currencies after the Bank of England Governor said on Wednesday he is poised to embark on "unconventional measures" to pump cash into the economy as soon as this week.
Mervyn King said the Bank would start buying commercial paper this week, and would most probably move on to full-scale quantitative easing, which involves buying securities but printing money to pay for it, before long.
In a further surprise, Mr King said the Bank was prepared to buy government debt in an effort to bring the economy back on track - something which, so far, neither the Federal Reserve or European Central Bank has embarked on.
He said: "The projections imply that further easing in monetary policy may well be required. That is likely to include actions aimed at increasing the supply of money in order to stimulate nominal spending," adding that the Bank would consider buying gilts - government bonds - as part of the scheme.
The news - alongside a Bank economic forecast which was far more pessimistic than many City analysts - sent the pound careering downwards against other currencies.
Sterling dropped by well over 3 cents against the dollar to $1.4352, and the euro was up more than a penny against the pound to 89.89p. The pound's fall coincided with sharp falls in gilt yields, indicating that traders had bought more of the government bonds in anticipation of the Bank's unconventional measures. [always one step ahead, eh?]
The Bank's Inflation Report predicted the biggest undershoot of the Monetary Policy Committee's 2pc consumer price index target in its history, warning that unless more is done to stimulate the economy, CPI will drop to around 0.5pc later this year.
City economists took this as a sign that the Bank will cut rates even further below their current 1pc rate in the coming months - as well as embarking on unconventional measures. It came as a surprise to some economists, who [were asleep at the wheel?] assumed that the MPC had little leeway to cut rates.
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