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Further QE may be on the cards to curb inflation

The Bank of England may be forced to extend its quantitative easing programme to keep inflation at 2%, governor Mervyn King has warned.

King wrote to chancellor Alistair Darling last week to explain why inflation rose to 3.5% in January, up from 2.9% in December – its highest level since November 2008.

In his letter, King says the com-mittee will take whatever actions are necessary to keep inflation at 2%.

He says: “We will continue to monitor the appropriate scale of the asset purchase programme and further purchases would be made should the outlook warrant them.”

Minutes from the last Bank of England’s Monetary Policy Com-mittee show all members agreed not to extend its £200bn quantitative easing programme.

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  • Paul Silcox 22nd February 2010 at 1:54 pm

    Agree L Smith. I can just hear the mortgage brokers giving this advice as I type….

  • L Smith 22nd February 2010 at 1:22 pm

    I had to laugh at this. You’ve got it completly wrong.

    QE does not curb inflation it is inflation, and inflation causes price rises.

    I’m sure the government and the mortgage industry would really like to print more money to keep lending and house prices artifically high but the bond market wont have it with CPI running at 3.5%.