Bank Of England Halts QE After "Potency Questioned"

Tyler Durden's picture

In what may be the most disturbing news of the day, moments ago the BOE announced it is halting its own version of QE3, and capping the asset purchase program at £375 billion after "some policy makers questioned its effectiveness in supporting a recovery that remains lackluster." Could it be that even that peculiar Homo Sapiens subspecies known as "economist" is starting to realize that when applying the same "remedy" time after time to absolutely no avail, and where even the market no longer responds to unlimited injections of liquidity, then perhaps it is time to end said "remedy" altogether? And how long until the voodoo shamans in the dark lit room at Marriner Eccles follow through? Sadly, if Japan, and its 9 (so far) rounds of easing, is any indication, we have a lot more pain to go before what has been glaringly obvious to every hotdog vendor and shoeshine boy is also understood by Economics Nobel prize winners.

From Bloomberg:

The nine-member Monetary Policy Committee led by Governor Mervyn King kept its target for asset purchases at 375 billion pounds ($598 billion) today, ending its third round of quantitative easing. The decision was forecast by 35 of 45 economists in a Bloomberg News survey. The remainder had forecast an increase of as much as 50 billion pounds.


Today’s move suggests the London-based central bank may focus on credit-boosting initiatives such as the Funding for Lending Scheme to ignite growth. Increased inflationary pressures may also have prompted policy makers to hold fire even as surveys point to renewed weakness after the U.K. economy surged 1 percent in the third quarter.


BOE Deputy Governors Paul Tucker and Charles Bean both suggested in recent speeches that asset purchases may no longer have the same impact on the economy as when first introduced in 2009. At the same time, Martin Weale has questioned whether loosening policy is right with inflation above the central bank’s 2 percent target.

The UK needs more hedonically edible iPads because inflation appears to be an issue:

Inflation was at 2.2 percent in September and King said last month that recent energy costs increases mean it will stay above the goal “well into next year.” Renewed signs of price pressures combined with the third-quarter gross domestic product data and comments from MPC members led banks including Citigroup Inc. and Barclays Plc to abandon forecasts of more QE today.


“The widespread expectation of unchanged policy marks a sharp turnaround from forecasts just a few weeks ago that QE would be expanded,” said Chris Crowe and Blerina Uruci, economists at Barclays in London. “This is partly due to evidence of firmer inflationary pressures.”


The MPC had new growth and inflation forecasts at today’s meeting, which it will publish next week. Minutes of the meeting, showing how the committee members voted, will be released on Nov. 21.

Finally, since one never says never in Keynesville, it is likely only a matter of time before the insanity returns:

Even with QE halted, the Bank of England still has the FLS, which it set up with the U.K. Treasury and is aimed at boosting lending. The program began in August and as of last month, 30 financial institutions had signed up, including Lloyds Banking Group Plc and Barclays.


“QE still has a benefit and those benefits will stay there -- they’re not unwinding any purchases,” said Alan Clarke, an economist at Scotia Capital in London. “And they won’t close the door on it, they’ll leave their options open.”

And now, we look forward to the ECB confirming that when it comes to failed monetary system, for every good cop there is at least one absolutely insane cop.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
GetZeeGold's picture



Our no good?

Short Memories's picture

It's like the 5 stages of financial grief, they are moving out of the denial phase into the bargaining phase.

I guess in the end, the acceptence phase, they realise since they can't default and maintain control of government that the only way forward is the outright monetisation of debt, and hyperinflate the proplem away at the expense of the tax payer / saver

JPM Hater001's picture

And after that Mr. Keynes never fucked with economics again.

cowdiddly's picture

Famous Ecomomics majors. Trickle down Ronald Reagan, Arnold Swarzeneger, Mick Jagger........enough said.

    Well I will give Mr. Jagger a break after all he said it was "Shattered, Splattered all over Manhatten- My brains are battered. This town full of Mardi Gras, Go ahead, bite the Big Apple, Don't mind the maggots............"

TruthInSunshine's picture

It's incredibly ironic that the BOE, with England being the birthplace of Keynes, and the place where fractional reserve deep capture of sovereign goverments was born, openly states that QE fails at its essential purpose, while The Bernank & Co. don their see no evil, hear no evil & speak no evil monkey faces.

saturno_v's picture

A possible pragmatic explanation....maybe given the size and structure of the UK economy, the BOE realizes that it has reached the end of the rope as far as QE goes...they do not have the same latitude of intervention of the US (largest economy in the world and world's reserve currency) or even Japan (economy size and trade position)

Last time I heard, inflation was picking up strongly in UK.


In few words....maybe the UK is closer than the US and Japan to the boundary of turning your currency into toilet paper......

Boeing Boy's picture

Hilarious,  USA USA re-elect a socialist for another four years of money printing and you suggest somehow UK is close to turning pound sterling to toilet paper?  


Dream on, things are looking up here in Blighty.  We are going to power ahead of the continent in the coming months, (relatively speaking) and I see that over there across the pond you have already resorted to begging, robbing and shooting burglars.  Delusion reigns supreme in USA USA.

icanhasbailout's picture

It's clearly a psychological problem, may I prescribe some Policigra(tm)?

ZippyBananaPants's picture

Save a tree, eat a Beaver!

GetZeeGold's picture



There's an idea.....we could trade in beaver pelts. Hope the women don't mind.

Doubleguns's picture

They could not possibly mind. They throw the pelts away after every waxing.

falak pema's picture

baby, baby, sing that to me...the law of diminishing returns as the fiat pump now cavitates on lost suction. 

'I can't get that pump to work! I've lost suction head!'....

GraveyardSpiral's picture

"...absolutely insane cop"  C'mon stop with the rhetoric.  People in a position of power can be trusted. We haven't had any proof that cops are getting hungry and going out of their minds, wait, wasn't here a cop in NY that... oh, nevermind   Run!!!!

Anglo Hondo's picture

Just for a moment, I thought that was MDB ("People in a position of power can be trusted".)  Then I read on....

insanelysane's picture

They must not be using the proper inflation calculations because here in the US there is no inflation even though gas and food prices have increased.

O better pray for global warming because if the US has a cold winter this year there is going to be trouble.

ZippyBananaPants's picture

"Spain also sold €4.76 billion in 2015, 2018 and 2032 debt (more than the expected €4.5 billion) at muted conditions"


Is it possible that Bernanke is buying these to prop them up too?

THE DORK OF CORK's picture

 Major devaluation of Sterling coming which means Ireland must also leave the eurozone.


its really all about the North Sea and how the Big bang of the early to mid 80s blew this black gold on Grot.


You cannot really deal with decline rates of 10 to 15 % a year without devalauation.


Almost All available UK resourses should go into rebuilding the 19 th century railways destroyed by Beeching in the Petro fueled sixties.

falak pema's picture

I wonder what Mutti said to Cameron when she visited with him in the aftermath of US election. 

I see a whole number of dots emerging that may tell us how this deleveraging will unwind; if TPTB have decided to pull the plug on the TBTF!

'Cos when the soufflet becomes unsustainable then thieves fall out and its every nation for himself. 

Oh what a fall that will be my fellow world citizens. 

Strange world : Mervyn says "I fear inflation in UK" PRECISELY when Draghi says "inflation in EUro zone is the LEAST of my worries..."

Ghordius's picture

not much, they watched some DVDs together. Mutti seems to be a fan of "Midsommer Murders".

But Chris Grayling is still advicing Cameron to stir trouble in the EU - possibly with Maggie Tatcher moments and vetoes in the Council - because this keeps the conservative backbencher happy.

Cameron is focused on the next election - who isn't? - and hectoring against the EU gives him conservatives votes. that simple

THE DORK OF CORK's picture

The physical economy of the UK is in much worse shape then France ........France is very closely linked to Uk now and is undergoing a massive external shock as the Anglo world begins to break down

When the UK prints and France pulls out of the Euro the BRICs will collapse as their capital export days will be over.....although to be fair theres not much capital remaining to export.


French housing starts down to 2009 lows again.

Offthebeach's picture

"...French housing starts.."

Somehow the government needs to get the Muslim birth rates up. Maybe new type apartments with multiple kitchens for each wife, ritual lamb slaughter decks, prayer speakers in elevators, etc.

Sale Away Soon's picture

And the 25% devaluation over the past 3 years wasnt *major*??

THE DORK OF CORK's picture

Not major enough ...........


Have you seen their trade data ?


I guess the Germans & Chinese need a market for their product and of course the UK will want all the real goods it can get its hands on but its clearly a very unsustainable trade dynamic.

Bubble's picture

Are they halting it? I think just keeping it on hold for now. Not the same.

Doubleguns's picture

Maybe they are just going to hide it.

BigJim's picture

Let's see now. Our economies, banks, and governments are addicted to the sugar-rush of cheap money. We all know here at ZH that it actually destroys capital in the long run, because inflation sucks the capital-ness away from existing capital holders and into the hands of the people who have proven time and again they are least able to allocate it efficiently - the government and financial sector.

So why is the BoE quitting QE now?

Either their constituents (ie, commercial banks) are now sufficiently capitalised... or they're sending some kind of message. 

What kind of message might they be sending?

Hmmm. Well, we know the markets react positively to QE, and negatively to any hint it will be withdrawn. Merv is due to be replaced soon. 

This has nothing to do with QE's ineffectiveness viz-a-viz the wider economy. They could care less!

I think the BoE want markets to crash so the Tories will choose another dovish Guv'nor. 

Mae Kadoodie's picture

Get to work, Mr Bernank. You fucker.

Urban Redneck's picture

Barry has some more flexibility now...

CheapPanderingCrony's picture

You forgot the Taxi driver.

Doubleguns's picture

While bleeding to death simply plug in multiple saline bags. That should keep plenty of liquidity in your system.

ummm......the dilution of blood (dollars) however might not turn out so good for you.

GetZeeGold's picture



Just remember....saline only works for a little while.

JPM Hater001's picture

Yes, eventually you will need to move to vodka.

TheCanadianAustrian's picture

Classic economic homeopathy. The reason our currency isn't strengthening is that we just haven't dilluted it enough.

The UK government funds homeopathy, by the way.

Doubleguns's picture

Benny said the dilution will not be a problem. Plug in as many bags as you want. Vodka is OK too.

Offthebeach's picture

Athletes measured running have high heart rates, so a body bleeding with a IV bags has a high pulse and therefore healthy.

All_Is_Well's picture

No, no, no...from here_on out it's the ChairSatan or Bust!

NuYawkFrankie's picture

Welcome to the Austerity Games - the Big Freeze coming to a theater near you, real soon.

("Jolly sporting" of the BOE to hold off the announcemnet until affter the erection, don't you think?)

JPM Hater001's picture

I predict:

You won't believe the shit that get released in the next 60 days.

buzzsaw99's picture

It's a good thing the BoE goons are there to show poor old England how to print money because otherwise they wouldn't have the foggiest idea how to do it. [/sarc.]

ThirdWorldDude's picture

BoE didn't come up with that solution by themselves, The City goons did that for them!

agNau's picture

Quick, phone Brown for advice.

Josephine29's picture

For the economist quoted at the end who claims that there is a benefit from QE,what is his evidence? Are things going so well? As shown by the quote below it seems even some at the Bank of England are not sure.

Mind you the Bank of England does not always seem clear

We do get certainty from some.

The evidence suggests that QE has worked

But much less so from others

And I certainly wouldn’t want to suggest that we know with any precision how big the impact from our asset purchases will be.

Meanwhile in the real world

Rather conveniently the UK GDP figures were rebased at 100 in 2009 which is when QE began. As of the latest numbers from last week we are now at the giddy heights of 103.

So for QE to have had the impact claimed by the Bank of England we would have had to have no economic growth at all for three and a half years from any other source. I will leave it to readers to decide for themselves how likely they think that actually is…..

So there doesnt seem to be any real evidence at all..

THE DORK OF CORK's picture

Josephine - it has worked to a certain degree - it has kept debt service low


The UK has not imploded like Spain or Ireland.


Their car regs is the only growing large market in Europe for example.

Their bus regs until last month was the only growing large market in Europe.


They are desperate to buy capital stock while they still can.

THE DORK OF CORK's picture


Ford transit have made a major mistake moving to Turkey - a further UK devaluation will make my point for me.


Their Bus market was flying until October...........


van sales declines always point to a decline in domestic work such as plumbers  , handymen etc  (their construction industry is tanking)




£31 billion euros worth of chinese imports in 2011

£-22.2 billion euros trade balance in 2011.

This is not sustainable - China is at the other side of the world is it not.

This is not rational trade - its a wage arbitrage trade.

Cursive's picture

What's next?  The return of mark-to-market?  Wait until the first bank fails a stress test or Tier 1 ratio is reported and we'll see the return of QE.

Being Free's picture

Inflation was at 2.2 percent in September and King said last month that recent energy costs increases mean it will stay above the goal “well into next year.”

That's sooo old school.  Everyone knows rising food and energy don't count.

Ghordius's picture

Mr. King is an old fashioned Brit. perhaps this might change with the next BoE chief, I understand a Canadian.

Catullus's picture

Coordinated dollar appreciation.  Bear market coming.

Alpha Dog Food's picture

At least they are not doing that 'insane thing' : keep on trying the same thing to see if you can get a different result. I can raise their 'potency' though. Tell them to pay a visit to my blog if they want to get their sap up!

orangedrinkandchips's picture



It's like my kids....OF COURSE THEY WILL TOUCH THE STOVE even though I tell them it's HOT!! They see red and still touch it.




You think my 5 year old and these 65 year olds are any different?