Allianz Global: BOE May Pause Quantitative Easing.
Allianz Global on why the BoE may not be done with quantitative easing!
Italy-based boutique brokerage, Allianz Global, is apparently skeptical of the motivations for the decision this week by the bank of England to pause its controversial program of quantitative easing.
Analysts at the firm belief that the Monetary Policy Committee bowed to pressure from the British Prime Minister, Gordon Brown, who is facing mounting concern over the size of Britain’s public sector debt.
Britain recently emerged from its longest recession since World War II by posting 0.1% growth in the final quarter of 2009.
Allianz Global apparently believes that the recovery in Europe’s second-biggest economy is so weak that the Bank of England will be forced to restart its quantitative easing program once it becomes clear that the UK economy is unable to continue growing one without support from the government.
Allianz Global sources suggest, however, that the central bank may face resistance in light of mounting concerns over the problems of sovereign debt in the euro zone. Greece has recently been subjected to intense speculation that it would default on its sovereign debt obligations unless it receives a bailout from stronger economies within the European Union.
Allianz Global sources suggest that, although the United Kingdom has its own currency, the ability to inflate it at will is unlikely to be of benefit once markets lose confidence in the ability of the government to manage its debt.