A guide to quantitative easing

During the first week of March, the Bank of England cut the base rate of interest in the UK to 0.5% and, having all but exhausted the full extent of 'conventional' monetary policy, it announced the start of 'quantitative easing'. In this guide, we explain what quantitative easing is and how the Bank of England will implement it. We examine whether it will work and the investment implications of its operation. In summary, we believe it is uncertain whether the policy will bring about a dramatic change in economic and financial conditions and that further attempts to ease those conditions by the reduction of government bond yields are likely.