A Monetary Policy Committee (MPC) economist said the potential Base Rate trigger which could start the unwinding of Quantitative Easing pumped into the UK’s money supply by the Bank of England has dropped to ‘around 1.5%’.
The timeline for the unwinding of the £375bn of the new money injected into the money supply by the central bank between 2009 and 2012 is hard to predict, but won’t destabilise the economy, said Dr. Gertjan Vlieghe External MPC Member.
In a speech this morning to Imperial College Business School, Vlieghe said: “Unwinding QE need not have a material impact on the shape of the yield curve, or indeed on the economy, if properly communicated and done gradually.”
A Bank Rate of around 2% had originally been suggested as the indicator the economy had reached a firmer footing, but Vlieghe said the central bank has confirmed the reduced estimate last month due to the effectiveness of the Term Funding Scheme, part of the package of measures put in place after the Brexit vote in June 2016.
On the time frame for the QE unwind, he said: “We don’t know exactly when that will be.”
“But the framework is designed to ensure that, should inflationary pressures weaken after that date, the first response would be to cut interest rates.”
Victoria Hartley is contributing editor at Mortgage Solutions, Specialist Lending Solutions, Your Money and Your Mortgage at London-based publishing company AE3 Media.
She has an MA in Radio from Goldsmiths after gaining a 2:1 in a Comparative American Studies BA at Warwick University. She also holds a TEFL qualification and taught overseas in Mexico and Japan from 1994 to 1997.
Her role includes editorial oversight of the news, analysis and features, event content management and strategic and editorial consultancy for the AE3 Media group. She is an experienced video, broadcast and live-event host and regularly chairs web and podcast debates and interviews.
Multiple award nominations have resulted in two wins: Santander Media Awards, trade journalist of the year and Headlinemoney Awards, mortgage journalist of the year (B2B). Here is one of the award-winning pieces: https://www.mortgagesolutions.co.uk/news/2011/07/21/exclusive-tale-bailey-fraud-witness/
Previous roles include editorships of Mortgage Solutions, consumer title What Mortgage and trade title Credit Today as well as a stint freelancing for a variety of outlets including The Guardian and Which? Money.
