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

Quantitative easing and inflation - Essay Example

Comments (0) Cite this document
Quantitative easing and inflation Contents Introduction 3 Policy adopted by the Bank of England to minimise the inflation rate 4 Impact of quantitative easing in inflation 7 Revising quantitative easing 7 Inflation or deflation 8 Effect over the government 10 Conclusion 10 References 12 Introduction Inflation is a situation where the prices of goods and services are rising more than the general level and at the same time people are losing their purchasing power (Hart, 2009, p.15)…
Download full paper
Quantitative easing and inflation
Read TextPreview

Extract of sample
Quantitative easing and inflation

Download file to see previous pages... In the year 1694, the bank was established and on 1st March 1946 it became nationalised (Sayers, 1976). It gained its operational significance in the year1997 and from then the bank can independently work on the implementation of monetary policies (Bank of england, 2013). From the year 1993 the bank started to publish its inflation report on a quarterly basis. It contains a detailed economic analysis with the inflation projections for the upcoming months (Tennant, 2009). By depending on this analysis, the monetary policy committee of the bank take several decisions based on the interest rate (Bank of England, 2013). Quantitative Easing is a strategy in monetary policy that has been adopted by several governments and central banks to ease the effect of inflation. It helps to increase the money supply by purchasing securities from government or other securities from the market (Fukasawa, 2000, p.65). As the financial institutions got flooded with capital it helps to increase the money supply which will subsequently promote to increase the lending and liquidity. Quantitative easing is used by the central banks when the interest rates have already been minimized to near 0% levels and unable to produce the desired effect (Kimura & Small, 2004, p.45). In the following research the researcher will try to understand how the “Bank of England” is trying to minimise the inflation rate and if the Quantitative Easing program will cause higher inflation in future or not (Rochon & Rochon, 2012, p.69). Policy adopted by the Bank of England to minimise the inflation rate In the month of March of the year 2013 the inflation rate of United Kingdom has been rated as 2.80. For the purpose of national statistics inflation rate has been reported to the UK office. From the past history it has been found that from the year 1989 until 2013 the average inflation rate of United Kingdom is 2.81%. In the year 1991 it has its highest point at 8.50 and the lowest was in the year 2000 rated 0.50 percentile. In this country the most important categories in the consumer price index are transport and housing, followed by water, electricity, gas and other fuels. The following chart shows the previous inflation rate in a bar chart format- The consumer price index grew by 2.8% in the current year. In spite of the large increase and decreases the CPI remain broadly flat. The central bank of UK introduced a monetary policy balloon which helps to set the interest rate to control the inflation. One needs to keep the balloon flying at a steady height of 200 meters. It is like the same as the bank’s monetary policy committee tries to make the inflation steady at 2%. The main objective of the bank’s monetary policy is to bring stability in the price, lower the inflation rate by supporting the objectives of the government for growth of the economy as well as employment. The targeted inflation rate is 2%. In the budget statement each year the Chancellor of the Exchequer announces the targeted inflation rate. The bank can change the interest rate; however in an extreme condition the government also can ask the central bank to change the inflation rate for a certain period. Depending on the consumer price index the inflation rate ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Quantitative easing and inflation Essay Example | Topics and Well Written Essays - 2000 words”, n.d.)
Retrieved de https://studentshare.org/macro-microeconomics/1476196-quantitative-easing-and-inflation
(Quantitative Easing and Inflation Essay Example | Topics and Well Written Essays - 2000 Words)
“Quantitative Easing and Inflation Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.org/macro-microeconomics/1476196-quantitative-easing-and-inflation.
  • Cited: 0 times
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
Quantitative Easing - Decreasing Interest Rates
The US economy floods the market with money as a measure to overcome the impacts of the 2000 global financial crisis and subsequent bank collapses. From the viewpoint of Kollewe (2009), it is identified that this monetary policy does not really benefit the Fed even though this approach may bring notable achievements in the short term.
6 Pages(1500 words)Research Paper
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
Explain how the Bank of England tries to manage inflation and discuss whether the Quantitative Easing Programme may cause higher
The financial crisis has made the economy face several challenges and the Bank plans to overcome those challenges by using the quantitative ease methods to ensure free flow of the money (Ahmad, 2010). Same has hit the Bank of England as the increasing financial crisis has resulted in the increase of inflation.
7 Pages(1750 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
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
Write a proposal for relax quantitative easing monetary policy
When the interest rates are at or close to zero bound situation, the policy can no longer be executed but instead the central bank
4 Pages(1000 words)Essay
Through Quantitative Easing (QE), central banks buy long-term government bonds with newly printed money. This raises the bonds' prices, lowers their yields and provides a helpful boost to growth when central banks' main tool, the short-term inte
e are plenty of disputes over whether QE works.” - Discuss by collecting and analyzing historical data and by giving up-to-date real life example(s) from the Japanese, American, UK or EU economies with actual figures. The study on the technique of quantitative easing has been
10 Pages(2500 words)Essay
Let us find you another Essay on topic Quantitative easing and inflation 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