In 2009, the MPC began a programme of asset purchases or quantitative easing (QE), intended as a temporary measure to support the economy in the aftermath of the Global Financial Crisis. But a decade on from its introduction in the UK, QE has become bigger, broader and more persistent than expected. In 2019 the Bank’s Court commissioned the IEO Evaluation of the Bank’s approach to QE. The IEO was asked to carry out an end-to-end evaluation of the QE rounds between 2009 and 2016. That covers the Bank’s understanding of how QE works, tool design and implementation, governance and risk management and communication. The ... (full story)

Maintaining price stability is at the heart of what the Bank of England does. For the first decade of its existence, the Bank’s Monetary Policy Committee (MPC) was able to achieve that stability through changes in one policy tool – Bank Rate. But in responding to the global financial crisis, Bank Rate was cut to close to zero and the MPC, like policymakers around the world, had to turn to other – less familiar – tools to meet its aims. In 2009, the MPC began a programme of quantitative easing (QE), through the Bank’s Asset Purchase Facility, intended as a temporary measure to support the economy in the aftermath of ... (full story)

The IEO’s report is particularly pertinent given the recent expansion of the Bank’s stock of purchased assets, which more than doubled during 2020 and is currently targeted to reach £895 billion by around the end of 2021. Since the global financial crisis, and the Monetary Policy Committee’s (MPC’s) initial decision in March 2009 to purchase £75 billion of public and private assets financed by central bank reserves, QE has become a key part of the Bank’s monetary policy toolkit. Over the past decade the Bank has made a number of innovations in its QE operations, including expanding the residual maturity of the gilts ... (full story)