Quantitative easing on the back seat


Quantitative easing on the back seat

The Minutes to Mark Carney's debut MPC meeting were eagerly anticipated. They didn't disappoint. The big surprise was that nobody voted to increase quantitative easing (QE) in July; three members had voted to do so in June.

Economic Analysis

18 July 2013

Does this mean that the printing press has been turned off for good? Not necessarily, but it does suggest that QE will take a back-seat to other policy measures for the time being. The most obvious alternative is “forward guidance”, where a central bank gives guidance about what it intends to do in future about its main interest rate or other aspects of monetary policy like QE.

Forward guidance could be time-dependent, where the bank announces that it will keep interest rates unchanged until a specified date. Or it could be condition-dependent, with the bank saying it will keep policy unchanged until certain conditions are met (e.g. unemployment falls to a specified level). Please see our recent report for further details.

For those of you who fear that we cannot talk our way to recovery, fear not. The Minutes also made a teasing reference to "other options". This might mean purchases of other assets, like corporate bonds, or something else altogether. But the message is clear: QE is no longer the only show in town.

Latest news

Women and millennials help drive £17bn+ franchise sector to record levels

New research from NatWest and the British Franchise Association (bfa) highlights changes and profitability in the sector.

Winners announced for Skills & Opportunities Fund

52 winning organisations have been announced for round two of the 2018 Skills & Opportunities Fund.

RBS Multicultural Network meets Eric Holder, 82nd US Attorney General

Simon McNamara, RBS Chief Administrative Officer and Executive Sponsor of the RBS Multicultural Network, recently hosted an event in discussion with Eric Holder, the first black US Attorney General. They discussed career, ethnicity, diversity and even a little bit of politics. At the event, Eric Holder shared his wisdom and experience with attendees from the RBS Executive committee and RBS Multicultural Network. Simon McNamara blogs about his experience meeting Eric, a BAME role model, and why diversity is so important to RBS.

Set Tab for lightbox