Relevant:
- Bank of England's Dale warns about risks of loose policy
- Bank of Japan Risk: Running Out of Bonds to Buy (F'ING DISASTER LOOMS)
- U.K. Bond Auction Fails for First Time Since 2002
- Bank of England Gives Lenders Estimated $354 Billion
- Central banks' pursuit of inflation has turned Sisyphean and some are calling for it to end
2009-03-11 — bloomberg.com
The Bank of England opened a new front in its effort to ward off deflation today as it bought government bonds with newly created money.
The central bank today purchased 2 billion pounds ($2.8 billion) of gilts, its first deployment in a three-month plan that may see it spend 75 billion pounds. Investors offered more than five times as much as the bank said it would buy.
The UK has jumped off the very same ledge the US Fed will have to soon (really, it already has, with the alphabet soup programs of buying toxic bank debt). And this has to be the most oxymoronic statement from a central banker of the century:
King said last week he’s confident that the bond purchases will help return inflation to the 2 percent target. The central bank’s forecasts, published last month, show the inflation rate dropping to 0.3 percent in early 2011.
Some would say that expanding the money supply to buy public debt (really, the debt of bailed out bankers) is inflation. If it goes down to the 2 percent target, you can be assured it will soon have to give all that progress back, and then some.
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