We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Explain how the Bank of England tries to manage inflation and discuss whether the Quantitative Easing Programme may cause higher - Essay Example

Comments (0)
INTRODUCTION The banking arena is undergoing financial turmoil. All the institutions have failed to predict the financial crisis which has disrupted the monetary plans and has resulted in an epic failure of the economy. The Bank of England is the central bank of England and it is the responsible institution for assuring the free flowing of the money throughout the economy…
Download full paper
Explain how the Bank of England tries to manage inflation and discuss whether the Quantitative Easing Programme may cause higher
Read TextPreview

Extract of sample
Explain how the Bank of England tries to manage inflation and discuss whether the Quantitative Easing Programme may cause higher

Download file to see previous pages... The rate of inflation of the economy is jumping high. Financial analysts quote this rate of inflation as an all time high. The Bank has constantly failed to maintain the rate of inflation which has been prescribed by the government (Dimsdale, 2009). The Bank may blame the cause of the increasing inflation on external factors, but the problem mainly arose because to deal with this situation the Bank started printing money. The printing of money was not backed by gold reserves held by the Bank. Apart from this the quantity of Bank notes printed was in a very large amount (IEA, 2013). The bank is of the view that it has done the right thing. By doing this the bank has breached the government instructions of maintaining a 2% inflation rate but has successfully managed to maintain an annual rate of 5-7%. The Bank claims that this policy will ease of the debt payment. EXPLAINING THE PERSPECTIVE OF THE BANK OF ENGLAND The argument of the Bank of its actions can not be catered by the common rational of an individual. This is because no rational economy would take such an action. Printing so many currency notes will prove to be a hole in the economy. Printing extra notes will always result in more inflation then before. The rise in the inflation rate will prove to be beneficial for a few of the citizens. The rise in the inflation rate will impact the individuals as an additional tax implemented on them. The individuals will feel a prominent squeeze in the prices when paying of the utility bills or consumable goods. The government has eased the individual by implementing several tax cuts by decreasing costs and fuel prices, etc (Bell, Martyn, & Stanton, 2012). The complete economy is facing a problem of rising inflation. This is causing a problem because there are financial crisis rising due to the upcoming recession. The economy needs to deal with the situations accordingly. If it fails to do so then the people of that economy would be facing huge problems. This is the reason why it has become necessary for the economy to use quantitative easing. This will raise the flow of funds within the society. By taking these actions the economy can survive the effects of recession (Anderson, Gascon, & Liu, 2010). The result of quantitative easing will be rising amounts of inflation and hence devaluing the real value of the currency. This action taken by the Bank of England will raise the inflation of the country due to the devaluation of the currency. The set of standards of the government are not being followed appropriately, in this case, and for this reason the economy has a low annual inflation rate but the instant rate of inflation is high. The debt repayment of the economy can also be done easily to reduce the debt of the economy. Quantitative ease is the process which is used to manage and reduce the debt instantly. The rationale behind this action will ensure that the economy will become successful in eliminating the debt but the currency will devalue resulting in a higher inflation rate (Breedon, Chadha, & Waters, 2012; Cobham & Kang, 2011). Any central bank which does not want inflation to occur will not use the qualitative pricing technique to cover up with the shortage of the funds. The usage of the printing of currency notes will surely result in a higher inflation rate (de Rezende, 2011). QUANTITATIVE EASING When the standard ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
Quantitative Easing
Quantitative Easing Name Course Professor Date Quantitative Easing Introduction; Quantitative easing is an unusual financial tool used by central banks to arouse the economy. This is when there is a depression or the nation is limping along. The central bank set aside will decrease short-term interest rates in order to stimulate lending and expenditure.
8 Pages(2000 words)Essay
Bank of England Quantitative Easing(Benefits and consequences)
Recently, the US has decided to push forward with a second round of quantitative easing, while the UK is itself also contemplating a similar move. The controversy in the quantitative easing policy is that it tends to be inflationary, because of new money released in the market.
40 Pages(10000 words)Dissertation
Quantitative Easing
Name Institution Course Instructor Date Quantitative Easing Stimulating the economy of a country requires unconventional measures that involve monetary policies such as quantitative easing. In such a case, a country’s central bank purchases financial assets from banks and any other private sector business with new electronically created money in order to inject a pre-determined amount of money in the economy of the country (Mayer, 2010:266).
6 Pages(1500 words)Essay
Macroeconomics - Quantitative Easing
This is facilitated by the private sector and banks by means of electronic money. The liquidity and funding in the money market increases by a growth in the money supply due to a rise in capital in banks and other financial institutions (Wieland, 2009). Quantitative easing is divided into expansionary and contractionary policies as well.
5 Pages(1250 words)Essay
Applied Economics
The bank obtained operational independence to set the UK monetary policy in the year 1997. In April 2013, key operational changes were enacted on the bank since the financial crisis displayed the necessity for a novel approach to financial regulation (Conaghan, 2012).
8 Pages(2000 words)Essay
Quantitative easing and inflation
In most of the times when a country suffers from inflation the central bank of that country takes several steps to stop severe inflation and tries to minimise the prices of the goods and services (Hudson, 1982, p.67). The central bank of United Kingdom is known as “The Bank of England”.
8 Pages(2000 words)Essay
Quantitative Easing (Pros and Cons)
Most governments feel that asset purchases provide additional stimulus to nominal spending and this is the important aspect in reducing the level of inflation in a country. While this may be true, economist is still skeptical on the effects of such a move on asset prices, the expectation of the public and the availability of credit for a stable economy.
5 Pages(1250 words)Essay
Why did the bank of England adopt a policy of inflation targeting in 1992 and how has the pursuit of inflation targeting been linked to attempts to make monetar
t the whole regulation and the functioning of the Bank and the way it deals with various economic pressures, like Inflation, Deflation and Interest Rates. We will also analyze the factors which were responsible for a change in monetary policy in 1992, and the stance of Bank of
6 Pages(1500 words)Essay
Explain the difference between quantitative easing(QE) and credit easing(CE) and discuss the theoretical channels through which they may affect financial markets
They turned to nontraditional policies to strengthen financial market conditions. They cut the policy rates on suddenly repurchasing accords and simplified credit for liquidity-hungry banks. As policy rates got to near zero levels, central banks ensued to provide
8 Pages(2000 words)Essay
Quantitative Easing
The purchase is made from banks and private sector businesses by means of new money that has been created electronically. This is different from the traditional buying and selling of government bonds to keep the
5 Pages(1250 words)Essay
Let us find you another Essay on topic Explain how the Bank of England tries to manage inflation and discuss whether the Quantitative Easing Programme may cause higher for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us