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Bank Calls In Economists Over Lending Drought

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The Bank of England has called the City's leading economists to a meeting today in an attempt to explain its policy of quantitative easing (QE) and its position on charging for banks' cash deposited in its vaults.

The meeting marks six months since the QE programme began, with the Bank pledging to pump £175 billion of “newly printed†money into the financial system.

Bank officials may also give economists an idea of whether the programme will be extended beyond the £175 billion already planned.

In August, Mervyn King, Governor of the Bank of England, was one of three members of the rate-setting Monetary Policy Committee (MPC) who voted to extend QE by £75 billion.

Any reports on what happened with this?

Love to know what bu11sh1t was said by the delusional idiots.

Edited by interestrateripoff

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Any reports on what happened with this?

Love to know what bu11sh1t was said by the delusional idiots.

Oh yes, I had forgotten about this meeting scheduled for today.

If anything of interest happened, any news of it, has probably been drowned under all the excitement of our Leader's speech. :rolleyes:

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At a rare briefing at the Bank, Charles Bean, deputy governor, Spencer Dale, chief economist, and Paul Fisher, executive director for markets, clarified the Bank's position after heightened expectation that it was about to follow Sweden's lead by effectively imposing a charge on a proportion of cash that UK banks keep in its vaults.

The idea, which would further loosen monetary policy, had been gaining traction in the market since Mervyn King, the Bank's governor, said earlier this month that the Monetary Policy Committee (MPC) was "looking at" the policy when he was questioned by the Treasury Committee.

However, the Bank's policymakers described the move as "a second order question" which was not among the MPC's immediate concerns. They pointed out that Mr King had simply answered a question put to him.

"They didn't close the door on it but they suggested nothing was imminent," said one of the economists who attended the meeting. "They told us that all these things are under review but there should be no presumption the Bank would do anything."

After the Bank distanced itself from the policy the pound closed up about a cent against the euro at €1.0957 and half a cent against the dollar at $1.5937. Last week sterling suffered renewed falls after Mr King said its weakness will be "helpful" to economic recovery in Britain.

Yesterday his colleagues defended his comments to economists saying they were perfectly appropriate and justified. They claimed that the fall in sterling which followed Mr King's comments was an overreaction on the part of markets and commentators, who interpreted it as a sign that the Bank had adopted a policy of "benign neglect."

"It was the standard Bank of England wall on this. They would never say they were trying to talk down the pound," said another economist who attended the meeting yesterday.

Although the policymakers reportedly suggested they were comfortable with sterling's depreciation so far, they said that "a deep prolonged fall from here" would be a concern.

The meeting gave London's economists a rare opportunity to directly communicate with the Bank, which is known for its extreme secrecy and has been criticised in the past for it. Other topics included its radical quantitative easing (QE) programme amid growing confusion about its aims.

"They were trying to readjust the focus back to where they thought it should be on quantitative easing," said one economist after the meeting.

The Bank was apparently keen to emphasise that the success or failure of QE could not be judged on bank lending levels, which have remained weak. It pointed to improvement in corporate credit markets as a sign that QE was taking effect. Britons are choosing to save more rather than get into more debt in a further sign that households are changing the way they manage their finances in the wake of the recession. The saving ratio rose to 5.6pc in the second quarter – the highest level since 2003 – data showed yesterday.

Separate figures showed that the economy shrank by less than initially feared in the period April-June after a significant upward revision of construction output over the period.

Considering all the free money having been pumped into the system if the economy hadn't had a better quarter it would have been rather embarrassing.

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so we are saving again....course, 200,000 households not having to pay their mortgage interest ( they are paid 6% or so by the government regardless of the actual interest rate) could themselves be saving up.

Me, Im paying down and saving. looking forward to spreading my tax over 12 months too.

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