The Bank of England slams the brakes on the printing press!

[Mega]

http://www.telegraph.co.uk/finance/f...ve-easing.html

Was NOT expecting this, note the German's now say they fear "Large inflation" "As we come out" of this trouble!!!!!!!

Anyone got any idea's?
Mike

[cjppjc]

Re: The Bank of England slams the brakes on the printing press!

Here is the key.



"It is our view that the MPC will complete its £75bn quantitative easing programme, but will offer no further monetary policy stimulus as we hope to see the economy stop contracting in the second half of this year," he said.


Will the economy stop contracting later in the year?

[rjwjr]

Re: The Bank of England slams the brakes on the printing press!

http://www.telegraph.co.uk/finance/f...ve-easing.html

Was NOT expecting this, note the German's now say they fear "Large inflation" "As we come out" of this trouble!!!!!!!

Anyone got any idea's?
Mike

It is certainly above my pay grade to comment, but I will speculate...

Germany appears to be the 400 pound gorilla of the EU right now so apparently they are the ones that most influence EU policy. Germany fears inflation, probably more than any other EU member.

Maybe the result of the G20 meetings was an agreement, or at least a realization, that inflation is a very real possibility, not price deflation. As a result, maybe this is the first of a trend of central bank policy changes directed more toward fighting inflation, or at least no longer fueling the inflation fires. I don't know how this is possible at this point since much of the inflation-causing damage (money creation) has been going on for quite a while now and protectionist measures (competing and escalating currency devaluations and import tariffs) are likely in our future, creating even greater inflationary pressures.

Hopefully, more well-versed iTuliper's will respond to your question.

[GRG55]

Re: The Bank of England slams the brakes on the printing press!

http://www.telegraph.co.uk/finance/f...ve-easing.html

Was NOT expecting this, note the German's now say they fear "Large inflation" "As we come out" of this trouble!!!!!!!

From the article headline:

Doubt over second wave of quantitative easing

"The Bank of England's Monetary Policy Committee is unlikely to press ahead with a second £75bn wave of quantitative easing because the economy is showing tentative signs of improvement, an economist has warned..."

Anyone got any idea's?
Mike

Another multiple choice question Mega. Pick one:

1. Every company should have lots of economists on staff. That increases the probability that one of them will be right :rolleyes:
2. The official line is that QE1 was so effective that QE2 is now deemed unnecessary. On the other hand, maybe the Brits still have bad memories of the last time they launched a QE2 horribly over budget, and the BoE wishes to avoid a repeat :eek:
3. Mervyn decided that it would be unseemly for the BoE to spend any more money, on balance sheet trinkets and baubles, while he's lecturing Gordon about his spending habits :p
4. EJ's got an idea about this...might be worth rereading his post here...;)

[Mega]

Re: The Bank of England slams the brakes on the printing press!

Am not reading all of that!
Bloody Hell.............just give me the high lights!
Mike

[GRG55]

Re: The Bank of England slams the brakes on the printing press!

It is certainly above my pay grade to comment, but I will speculate...

Germany appears to be the 400 pound gorilla of the EU right now so apparently they are the ones that most influence EU policy. Germany fears inflation, probably more than any other EU member.

Maybe the result of the G20 meetings was an agreement, or at least a realization, that inflation is a very real possibility, not price deflation. As a result, maybe this is the first of a trend of central bank policy changes directed more toward fighting inflation, or at least no longer fueling the inflation fires. I don't know how this is possible at this point since much of the inflation-causing damage (money creation) has been going on for quite a while now and protectionist measures (competing and escalating currency devaluations and import tariffs) are likely in our future, creating even greater inflationary pressures.

Hopefully, more well-versed iTuliper's will respond to your question.

I doubt Germany has any great influence over UK monetary policy. The EU and Euro currency zone are not the same thing at all.

[GRG55]

Re: The Bank of England slams the brakes on the printing press!

Am not reading all of that!
Bloody Hell.............just give me the high lights!
Mike

OK. In EJ's own words with my embellishment added in red.

"...In a recession, a recovery in personal consumption, incomes, and retail sales signals the start of recovery. The virtuous cycle of credit growth--and its corollary, debt growth—combine with rising incomes as the rate of unemployment growth slows. Credit expansion leads the economy out of the cycle, followed by incomes. That is what many stock market participants, self-serving politicians, central bankers, and prominent economists think they are seeing now, as previous experience has trained them to see. But they are wrong..."

[Mega]

Re: The Bank of England slams the brakes on the printing press!

Ah..........EJ means they talking Bollacks!
Get you.
Mike

[nero3]

Re: The Bank of England slams the brakes on the printing press!

http://www.telegraph.co.uk/finance/f...ve-easing.html

Was NOT expecting this, note the German's now say they fear "Large inflation" "As we come out" of this trouble!!!!!!!

Anyone got any idea's?
Mike

One of the biggest problems for the ECB is that they are setting interest rates across the whole region. Some countries like Spain, Ireland, Greece could need a higher interest rate, maybe 2-3 %, while Germany certainly could have 0 %. The Germans feel greedy, as they don't want to subsidize the weak EU members, and was used to the solid Mark before the Euro. However, now they must share, and take their part of the bill of helping the banana republics like Portugal, Italy, Greece and Spain (PIGS), even Ireland. Italy on the other hand should be thankful they can avoid hyperinflation due to Germany and France as pillars of strenght. But, who knows, maybe it's all going down.

[occdude]

Re: The Bank of England slams the brakes on the printing press!

http://www.telegraph.co.uk/finance/f...ve-easing.html

Was NOT expecting this, note the German's now say they fear "Large inflation" "As we come out" of this trouble!!!!!!!

Anyone got any idea's?
Mike

They're exactly right. The pound is not the dollar, it is going to be much more sensitive to inflation. We get a pass because of the dollars foreign reserve status, the pound could be the next Argentinian peso. I think the British central bankers sniff inflation and if they're smart, are going to be very quick on the trigger to eliminate inflation. If they have more deflation however, they will continue in the true Keynsian tradition of quantitative easing (printing money).

I think we have a good 6mos. of rising prices and then possibly a rapid increase in inflation, which will aggravate the exporting countries possibly initiating a currency crisis in the US or GB. The GB central bankers know they're on a tightrope and therefore are going to be much more responsive to market conditions. At least if you're going to be a monetist you might as well be a good one.

[Spartacus]

Re: The Bank of England slams the brakes on the printing press!

How about

Portugal
Ireland/Italy
Greece
Spain
Turkey
Yugoslavia / Yemen (close enough for the joke ...)

One of the biggest problems for the ECB is that they are setting interest rates across the whole region. Some countries like Spain, Ireland, Greece could need a higher interest rate, maybe 2-3 %, while Germany certainly could have 0 %. The Germans feel greedy, as they don't want to subsidize the weak EU members, and was used to the solid Mark before the Euro. However, now they must share, and take their part of the bill of helping the banana republics like Portugal, Italy, Greece and Spain (PIGS), even Ireland. Italy on the other hand should be thankful they can avoid hyperinflation due to Germany and France as pillars of strenght. But, who knows, maybe it's all going down.