BOE Quantitative Easing Program Shows Positive Results

By TraderVox.com

Tradervox (Dublin) – According to some analysts and economists, the Budget statement expected to be released by Chancellor of the Exchequer is expected to indicate a 0.3 expansion of GDP in this year’s first quarter. Further, despite inflation being above expectations, it has reduced over the month, something that has been construed to mean that the BOE’s quantitative easing program is yielding some positive results. Inflation is expected to remain an issue as growth starts to be seen in the country paving the way for a forecast of 0.8 percent GDP growth.

BOE has undertaken an ambitious quantitative easing program that has been described by those opposed to it as a “gamble”. For BOE Monetary Policy Committee members, the program is the best for the country as it tries to evade a credit crunch looming in the region. A report from the UK indicate that the consumer price index increased by 3.4 percent against an estimate of 3.3 percent. Despite being lower than the previous reading of 3.6 percent, the index reading is higher than median estimate of 3.3 percent. The decline in CPI is inline with the general trend in Europe and BOE expects the CPI to drop to its target rate of 2 percent.

The data had positive results on the sterling pound, strengthening the currency against the dollar and euro. These positive reports are coming at a time when the UK is on the verge of losing its triple A Fitch credit rating and moody’s triple A investment ratings. The UK has been warned by the two institutions that if the economy does not change, they will have to revise its credit and investment ratings. Efforts by the BOE governor have yielded some results and this is expected to change sentiments towards the sterling pound in the market.

It is expected that the sterling pound will go back to its previous trading level, despite the increase it has realized in the European session. This is following the release of the same data in December when inflation decreased from 4.2 percent to 3.6 percent. The GBP increased against the dollar to 1.5750 but struggled to keep this level in the New York session finally closing at 1.5689.

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