Bank injects £50bn easing, as China and ECB cut rates
Moves by central banks across the globe signal further concern that world economy is stalling
THE BANK of England launched another round of quantitative easing yesterdy, injecting another £50bn into the British economy to take the total so far committed to £325 billion. Meanwhile, their counterparts at the European Central Bank (ECB) and in China both cut interest rates, the latter decision marking the second time in a month that Beijing has reduced borrowing costs.
A spokesman for the Bank of England said: "In spite of the progress made at the latest European council, concerns remain about the indebtedness and competitiveness of several euro-area economies, and that is weighing on confidence here. The correspondingly weaker outlook for UK output growth means that the margin of economic slack is likely to be greater and more persistent."
The decision was criticised by pensioners' groups, who will see their fixed incomes from pensions and savings further reduced. Ros Altman of Saga said: "We must question whether QE has, through its impact on annuity rates and pension funds, damaged growth. Following banking scandals this week, it is especially difficult to understand why we are doing more easing, which benefits banks more than other areas of the economy."
The ECB move to cut rates was inspired by job figures this week which showed a record level of unemployment across the Eurozone. As The Guardian reports, the bank's president, Mario Draghi, lowered the borrowing rate by 0.25 per cent to 0.75 per cent, and suggested that the institution had more tools at its disposal to stimulate the 17-nation bloc: "We still have all our artillery ready."
In China, the communist government is experiencing the worst economic conditions since the 2008 financial crisis. Its move to cut key borrowing rates by 0.31 per cent to six per cent is being seen by financial analysts as a sign that there is more bad economic news on the way. "This [rate cut] implies that economic data may turn out to be weaker than expected," Liao Qun of CITIC Bank International told The Daily Telegraph.