07 Oct '11, 10am
Quantitative easing won't help the real economy | Josh Ryan-Collins
Yesterday the Bank of England again surprised the City by announcing a further £75bn’s worth of Quantitative Easing (QE) , buying up government debt from the banks over the next four months. The hope is that QE will lower long term interest rates. The interest rate on the government debt being bought from banks now (mainly 3%) is higher than the new debt being issued by the government (0.5%). So it’s a very good deal for the banks and the idea is that they might start lending in to the real economy again and enable the UK to improve on the meager 0.5% growth recorded for the first quarter of this year.