{"id":2820,"date":"2009-07-09T14:02:31","date_gmt":"2009-07-09T14:02:31","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2820"},"modified":"2025-03-27T15:48:52","modified_gmt":"2025-03-27T15:48:52","slug":"mpc-signals-slowdown-in-asset-purchases","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2820","title":{"rendered":"MPC signals slowdown in asset purchases"},"content":{"rendered":"

There are three possible reasons for the MPC’s decision today to maintain the asset purchase programme at £125 billion, against expectations of an increase.<\/p>\n

First, the Committee may judge that the scheme is working as planned and there is no need for a further expansion. Arguments in favour of this view include recent stronger broad money growth and improvements in loan availability reported in last week’s Credit Conditions Survey<\/em>.<\/p>\n

Secondly, and more likely, the MPC is inclined towards an extension but wishes to slow the pace of buying and avoid the impression of an open-ended commitment. The August Inflation Report<\/em> forecasting round provides a convenient excuse for deferring an announcement, while maintaining the £125 billion cap will automatically cut gilt-buying from £6.5 billion to £4 billion per week.<\/p>\n

Thirdly, and least likely, the MPC judges that any positive effects are small relative to possible damage to its inflation-fighting credibility from continuing with the policy.<\/p>\n

The absence of any guidance about these alternatives in the MPC’s news release<\/a> is surprising and may indicate disagreement within the Committee.<\/p>\n

A reasonable strategy would be for the MPC to utilise the £25 billion still available under the existing authority in August while spreading purchases over two months, implying a further slowdown to £3 billion per week. Assuming more evidence of positive effects and wider economic improvement, the programme could be suspended at the October meeting.<\/p>\n","protected":false},"excerpt":{"rendered":"

There are three possible reasons for the MPC’s decision today to maintain the asset purchase programme at £125 billion, against expectations of an increase. First, the Committee may judge that the scheme is working as planned and there is no need for a further expansion. Arguments in favour of this view include recent stronger broad […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2820","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2820","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2820"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2820\/revisions"}],"predecessor-version":[{"id":5129,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2820\/revisions\/5129"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2820"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2820"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2820"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}