Bank QE prospects rise!

In a likely scenario of the economic growth to stagnate, Bank of England will pursue the option of pumping in billions in the economy. Sir Mervyn King, the bank governor, has sought the worsening conditions abroad – Eurozone crisis – and that there is nothing much the BOE can do to support the weak sterling and rapid deficit reduction. 

            The Bank is forecasting no growth till next summer and has downgraded it forecast from 2.2% to 0.9%. It is expected inflation to fall down from 5% to well below the projected 2% by end of 2012. The low inflation forecast suggests that Bank was planning to increase money printing operations above the targeted £275bn of QE. Given the QE forecasting for weak growth, the Sterling fell at 0.3% against the dollar to $1.5774