Where on the Bank of England’s web site is its exit strategy?

Genevieve Signoret & Patrick Signoret

We’ve been scouring the Bank of England (BoE) web site for communication on its exit strategy from quantitative easing but so far have come up empty. We find much material containing arguments to justify QE and to measure the impact of its first rounds, but so far nothing detailing its strategy for withdrawing it. If BoE has formulated its exit strategy and communicated it, it has buried this material so well we can’t find it.

Its educational page, Quantitative Easing Explained, summarizes the history of asset purchases under QE.

This speech by David Miles “reviews what can be learned from past asset purchases and what that implies about the impact of more asset purchases now.”

BoE’s most recent monetary policy statement announces the expansion of QE by 50 billion pounds over three months.

A somewhat more technical report called The United Kingdom’s quantitative easing policy: design, operation and impact focuses on the effects of QE, and how they might be measured. It says nothing directly about an exit strategy.

A search for the key words “exit strategy” on the website yields the following:

  • A 2009 speech in which Spencer Dale (chief economist of BoE) mentions exit strategy but says only that it should be “clear, transparent and open to public scrutiny”.
  • Another speech by Dale in which he writes:

When the time comes, the Committee can tighten policy both by raising Bank Rate and by selling assets. A natural corollary of both actions is that yields will rise – that is what happens when policy is tightened. The most difficult issue concerning the exit strategy will be deciding the timing at which policy should begin to be tightened. Although that decision will be highly uncertain and subject to intense scrutiny, the strategy guiding the decision – and the primacy of the inflation target within that strategy – should be clear.

One thing we did find: over and over, people at the BoE say “We really need to have a clear exit strategy.” Indeed!

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