Bank of England changes strategy

Bank of England changes strategy.

In minutes of the July Monetary Policy Committee meeting released on Wednesday, the Bank of England signalled a more mixed strategy that shifts its focus from the flagship quantitative easing programme as the sole means of stimulating the economy.

The minutes provided evidence of the radical change that new Governor Mark Carney has instigated in the BoE within days of his arrival, replacing traditional QE support with a range of other measures centred on guiding financial markets.

Policy makers within the Bank of England said that financial markets had prematurely withdrawn stimulus from the economy in June and as such, the immediate priority for maintaining economic recovery is to counter these moves.

The mentioned guidance can be used to stimulate the economy either by giving households and companies confidence to borrow and spend in the knowledge that policy will remain loose for some time, or by pairing it with new efforts to boost growth.

It has been said that the new emphasis on guiding markets will be formalised next month. Economists interpreted the move as a change in the Bank’s methods of supporting the recovery rather than a hawkish signal.

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