Daily Archives: November 23, 2011

Ever since Wen Jiabao, China’s premier, promised in October to “preemptively fine-tune policy at a suitable time and by an appropriate degree” markets have been waiting for monetary easing to begin.

In fact it is already under way, in the form of increased lending from China’s state-owned commercial banks and in sharp falls in China’s money market rates. But on Wednesday came the first sign of a lifting of reserve requirements. It has begun with rural banks. More will follow.

 

Claire Jones

The Bank of England’s latest forecasts show inflation falling below the Monetary Policy Committee’s 2 per cent target over the course of 2013 and 2014.

Given that the MPC usually sets policy based on where inflation will be two to three years from now, the burning question ahead of the publication of its latest minutes on Wednesday was why the committee hadn’t already announced more QE.

The minutes shed plenty of light on why that’s the case. But they do so in a way that undermines the  Bank’s ability to influence expectations of what people expect the MPC to do next.