Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • July 2012
07

Bank of England announces fresh bout of QE

Open-access content Thursday 5th July 2012

The Bank of England has announced a further £50bn of quantitative easing in a bid to help reinvigorate the UK economy.

2

Today's announcement by the Bank's Monetary Policy Committee takes the total amount of money pumped into the economy under the Bank's asset purchase programme to £375bn. The Bank also held interest rates at 0.5%.

In a statement the Bank said the stimulus was needed to address the impact of the eurozone crisis on the UK and the risk that inflation will miss medium-term targets.

'Against the background of continuing tight credit conditions and fiscal consolidation, the increased drag from the heightened tensions within the euro area meant that, without additional monetary stimulus, it was more likely than not that inflation would undershoot the target in the medium term,' it said.  

Joanne Segars, chief executive of the National Association of Pension Funds, said the extra dose of QE would only make the already difficult situation facing schemes even 'tougher'.

'The economists might argue about whether QE works, but there is no doubt that it short-changes businesses running final salary pensions, and people who are about to retire.

'QE worsens the yield on gilts, which increases the deficits of final salary pension funds and means people get a worse rate on their annuity. Those who are retiring could be locked into a weaker pension for the rest of their days.'

She added: 'Businesses will be forced to divert more money from jobs and investment into filling black holes in their pension funds. Our fear is that many will choose to close these pensions altogether, further weakening the UK's ability to save for its old age.'

Ms Segars said that after three years of QE, the Bank of England should now provide more evidence that it was working, and participate in a debate on its benefits.

Nida Ali, economic advisor to the Ernst & Young ITEM Club, said the latest round of QE was to be expected given recent downbeat outlooks for the UK economy.

'The drop in inflation in May and downbeat PMI surveys for June meant that the implementation of additional QE in July was almost a foregone conclusion,' she said.  
'We remain strongly in favour of looser monetary policy, not just through additional QE but also more unconventional means. In this regard, we support the schemes introduced last month, which are aimed at lowering banks' borrowing costs and increasing the amount of liquidity available to them.'

 

This article appeared in our July 2012 issue of The Actuary.
Click here to view this issue
Filed in:
07
Topics:
Investment

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

ALM Investment Actuary

London (Central)
£70000 - £90000 per annum + bonus, pension
Reference
120954

Longevity Actuary

London (Central)
£60000 - £90000 per annum + bonus. pension
Reference
120953

Senior BPA Pricing Actuary

London (Central)
£90000 - £120000 per annum + bonus, pension
Reference
120952
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2021 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited, Level 5, 78 Chamber Street, London, E1 8BL. Tel: 020 7880 6200