In a statement to Reuters, a spokesperson for the Confederation of British Industry said that it would be a mistake to hastily print more money in a second round of quantitative easing (QE2) because there is still a risk of inflation. The biggest lobbying group for business believes that the central bank should not fall prey to the political pressure being placed on it to print money or a new stimulus.

As the economy becomes gloomier by the day, government ministers revitalize efforts to convince the central bank that they do have leeway with fiscal policy. However, the Confederation of British Industry feels that boosting demand by buying assets should be placed on hold for the time being.

At the same time, there are those who hold that inflation is set to pass 5% which is why it would be a grave error to jump in when we don’t know where inflation will be. This could trigger an even deeper depression amongst those in the UK worried about their financial future.

Even so, most expect that the BoE will not heed these warnings and will go ahead with QE2, perhaps as soon as the coming month. The central bank has recently reported that Britain was in dire straits economically and things are worsening at breakneck speed. Because of this there may be a need to push more money into the economy more quickly than previously expected.

The lobbyists hold that rather than pump money into banks, any money printed for quantitative easing should rather be invested in businesses which are the backbone of the economy. The Confederation of British Industry asks rhetorically how government would get that money into the hands of those that could actually do something to fuel a floundering economy – businesses. With no answer to that in sight, no one is doubting that money will be printed prior to government updating parliament in late November.

Print Friendly, PDF & Email

About The Author

Copyright © Calculator.com 2017. All Rights Reserved

MENU