QE is poison pill – not silver bullet
Oh dear! it looks as though the siren voices of quantative easing are being listened to again. Aparently official new figures show that QE boosted GDP last time round by between 1.5% and 2% so the argument goes that we should repeat the medecine. However, the same figures show that QE also boosted inflation by 1.5%. My only surprise is that this figure isn’t higher.
Given that the target cap on inflation is meant to be 2% and CPI is already rising by 4.5% a year, a repeat dose of QE could take inflation to at least 6%, which would be disastrous for those on fixed incomes and would probably trigger a wave of unaffordable wage claims.
QE has been regarded in some quarters as a silver bullet, whereas it is actually more of a poison pill. Please Bank of England ignore the voices of the Sirens.
