While, in America, the talk is all about the likelihood of QE3, in Britain, the Bank of England is mulling QE2. Indeed, this Thursday, when the interest rate decision is announced, many expect that an announcement of an increase in asset purchases will accompany it.
There is little the Bank of England can do in terms of lower rates further, since the base rate is already at 0.50%. So, in order to stimulate the economy, BoE Monetary Policy Committee members may have to resort to a round of quantitative easing through asset purchases. While there are still some worries about Britain’s inflation rate, QE2 would be about economic stimulus, which the BoE probably thinks is necessary with all the recent stagnation.
At 13:08 GMT, the UK pound is losing ground to major currencies. GBP/USD is down to 1.5454 from the open at 1.5488. EUR/GBP is up to 0.8622 from the open at 0.8619, and GBP/CAD is down to 1.6255 from the open at 1.6283.
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