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MNI BRIEF: BOE Paper Finds Only QE Signal Drove Price Pressure

(MNI) London
(MNI) London

The signalling channel inflationary pressure driver via quantitative easing, a BOE working paper finds. Looking ahead, that inflationary channel is turned off during quantitative tightening.

True

Bank of England research into how quantitative easing worked supports the view that its effects varied in the different waves and that at times, the mass gilt purchases worked through both lowering term premia and sending a signal about the future direction of policy.

A key new finding, though, is that the signalling channel, which works when the policy rate is at its zero lower bound, was the one that drove inflationary pressure.

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Bank of England research into how quantitative easing worked supports the view that its effects varied in the different waves and that at times, the mass gilt purchases worked through both lowering term premia and sending a signal about the future direction of policy.

A key new finding, though, is that the signalling channel, which works when the policy rate is at its zero lower bound, was the one that drove inflationary pressure.

Keep reading...Show less