Bank economist: QE is showing positive signs

IT MAY be too soon to judge precisely how effective the Bank of England&rsquo;s quantitative easing (QE) programme has been but there are already early positive signs, the BoE&rsquo;s chief economist Spencer Dale said in a speech yesterday.<br /><br />&ldquo;It is still early days in terms of judging the ultimate success of the programme in stimulating nominal spending, but initial indications remain encouraging,&rdquo; said Dale.<br /><br />Gilt yields initially fell sharply following the announcement of the asset purchasing programme but have subsequently drifted back up. Yields on UK 10-year gilts are now at 3.74 per cent but Dale said this reflects a range of other factors and it is likely that yields are lower than they would have been without QE.<br /><br />Since March the Bank has purchased &pound;96bn of government bonds out of the &pound;125bn planned and the &pound;150bn authorised by the Treasury.<br />Dale also responded to criticism that the impact of QE was limited because of purchases by foreign investors.<br /><br />&ldquo;Even if that is the case, it does not mean the asset purchases will not have any economic benefit. Rather, more of the effect will come through a lower exchange rate,&rdquo; he said.