The Bank of England increased quantitative easing this week by a further £100bn to £745bn at its June meeting to support the UK economy through the Covid-19 crisis.
It was greeted by city analysts expecting the rise with general approval and some voiced opinions that more would have been better received.
The Bank of England started using quantitative easing to inject cash it into the financial system in the wake of the 2008 financial crash. Some financial commentators say this strategy seems the bank’s only answer to economic difficulties and called for more initiatives.
Options however are limited, and interest rates offer little room for manoeuvre. Remaining constantly low in historical terms and moving only between a high of 0.75% in 2018 to the current 0.1%.
Quantitative easing has been adopted globally with the US Federal Reserve setting the pace in response to Covid-19 with $1.7 trillion deployed.
The European Central Bank has cut interest rates aggressively to the point that they are negative and allow lenders to in effect pay companies to borrow.
Rishi Sunak has emerged and given the Government some respite with immediate and substantial financial aid to UK PLC. He will need to maintain this momentum and extend many of the initiatives as the impact from Covid-19 continues to accelerate.
He might thank his colleagues around the cabinet table if they can find justification to relax social distancing and open the hospitality industry up for business.
Relax social distancing and open the hospitality industry up for business is looking more likely today, as the Government reduced the Covid-19 alert level from 4 to 3 this morning.
Reopening: Measure twice cut once
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