The Bank of England defended today its policy of government bond purchases against criticism from savers and pensioners, saying recession would have been deeper and most Britons would have been worse off without its stimulus measures.
The central bank has come under fire from politicians, the pension fund industry and lobby groups, claiming that the ultra-loose policy was hurting pensioners' and savers' income because of ultra-low rates.
In a response to a request from parliamentarians to look into the distributional effects of its policy to buy assets with newly created money, the central bank said some benefited more than others, but a negative impact on any particular group was not clear cut.
"When considering these distributional impacts, however, it is important to remember that without the asset purchases, most people in the United Kingdom would have been worse off," the central bank said in its report.
Its analysis showed that the £325bn worth of assets purchased until May 2012 prevented an even deeper recession, it said.
"Unemployment would have been higher. More companies would have gone out of business," it said. "That would have had a detrimental impact on savers and pensioners along with every other group in our society."
City A.M. Reporter