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Bank Calls 'crisis' Meeting For Experts


shedfish

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HOLA441

Bank calls 'crisis' meeting for experts

The Bank of England has summoned the City's leading economists to an unprecedented meeting in Threadneedle Street, as the pound plunges amid growing confusion over its radical Quantitative Easing (QE) policy.

The Bank will host a seminar of all London's major economists next Tuesday – the first time it has invited them in en masse in recent memory – in what has been construed as a sign that it fears market participants are starting to lose faith in its efforts to pump cash into the economy. The move has also sparked speculation that it is poised to announce a major change to the monetary policy framework, although insiders dismissed such suggestions.

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Guest Daddy Bear
Bank calls 'crisis' meeting for experts

The Bank of England has summoned the City's leading economists to an unprecedented meeting in Threadneedle Street, as the pound plunges amid growing confusion over its radical Quantitative Easing (QE) policy.

The Bank will host a seminar of all London's major economists next Tuesday – the first time it has invited them in en masse in recent memory – in what has been construed as a sign that it fears market participants are starting to lose faith in its efforts to pump cash into the economy. The move has also sparked speculation that it is poised to announce a major change to the monetary policy framework, although insiders dismissed such suggestions.

It came after the minutes from the Bank's latest Monetary Policy Committee meeting revealed that the idea of cutting the interest rate banks are paid on the reserves they hold there was not discussed this month. The pound has lurched lower in recent weeks, thanks in part to speculation that ........

the Bank will impose charges on banks for holding excessive amounts of cash in reserve at its vaults.

......Under QE, it is pumping £175bn into the economy, but much of this cash is sitting in banks' reserve accounts rather than being recycled and flowing around the broader economy.

The suspicion that the Bank will soon take action to mitigate this has pushed down market interest rates sharply and contributed to an almost 5pc fall in the pound against other leading currencies. It has caused gilt prices and short-term interest rates to fluctuate wildly in recent weeks.

The Bank's seminar, chaired by deputy Governor Charlie Bean, alongside chief economist Spencer Dale and markets director Paul Fisher, is intended to clear up this confusion. It sparked anticipation in the City not merely because the Bank has a reputation for extreme secrecy, but because some suspect it may come alongside an announcement over the Bank's reserves policy. Others suspect the Bank is concerned that many think either that QE amounts to printing money, much as Zimbabwe and Weimar Germany did, or that it simply is not working.

However, insiders insisted that although the meeting was unusual, it is merely intended to mark six months since the policy began.

In yesterday's minutes, the MPC revealed that its nine members had voted unanimously to leave interest rates unchanged at 0.5pc and the QE total at £175bn, although both the Governor, Mervyn King, and external member David Miles said that "a larger asset purchase programme could still be justified." In a separate speech, MPC member Kate Barker said that the months ahead would be a critical test of whether a recovery was likely to be maintained.

She added that, even as growth picks up, rising unemployment will eliminate the "immediate prospect of a 'feel-good' factor".

She also indicated that low interest rates and Quantitative Easing would remain in place for the foreseeable future, saying: "As the expected recovery becomes established, monetary policy will need to be sensitive to the concern that too rapid an adjustment in private sector balance sheets could be provoked by premature monetary tightening."

Tipping point coming soon

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Guest KingCharles1st

So this is expected to set off a rush for the exits then...? :ph34r:

"She added that, even as growth picks up, rising unemployment will eliminate the "immediate prospect of a 'feel-good' factor".

Is this a WTF moment?

Edited by KingCharles1st
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Tipping point coming soon

theres always a karellian star cruiser about to blow the world up...its just that you have a telescope fixed to keep looking at the sky DB, and you see it all happening.

the older you get, the worse it seems.

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theres always a karellian star cruiser about to blow the world up...its just that you have a telescope fixed to keep looking at the sky DB, and you see it all happening.

the older you get, the worse it seems.

Are you saying the economists wore Eggar suits?

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Guest Daddy Bear
theres always a karellian star cruiser about to blow the world up...its just that you have a telescope fixed to keep looking at the sky DB, and you see it all happening.

the older you get, the worse it seems.

I think I totally agree but WTF are you on about? :)

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Guest Daddy Bear
Gilts will collapse immediately after the meeting if you were to have it your way

If they don't do so right away - watch the IRS

Mind I am hedged with a 10 year fix at 4.99% :D

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Gilts will collapse immediately after the meeting if you were to have it your way

If they don't do so right away - watch the IRS

If gilts collapsed that would really kick off a depressionary spiral (like 1931). Bye bye housing market, for sure

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