News ID: 92494
Publish Date : 16 July 2021 - 21:38

LONDON (The Gurdian) - The Bank of England risks becoming addicted to creating money and needs to come clean about how it plans to unwind its £895bn bond-buying programme, the House of Lords has warned.
A report from a Lords committee – the members of which include the former Threadneedle Street governor Mervyn King – said there was a threat of quantitative easing (QE) leading to higher inflation and causing damage to the government’s finances.
The Bank started using QE, a process whereby it creates money by buying government and corporate bonds, in 2009 during the global financial crisis, but has stepped up its use during the coronavirus pandemic.
But the Lords economic affairs committee said the Bank had become too dependent on the use of QE, which it said was widening Britain’s wealth gap by boosting asset prices.
Michael Forsyth, the committee’s chairman, said: “The Bank of England has become addicted to quantitative easing. It appears to be its answer to all the country’s economic problems and by the end of 2021, the Bank will own an eye-watering £875bn of government bonds and £20bn in corporate bonds.”

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