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Bank of England to reverse QE before rates are raised – Bailey

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The Bank of England must begin reversing quantitative easing before interest rates can be raised from record lows, according to governor Andrew Bailey. He wrote in an article for Bloomberg : “When the time comes to withdraw monetary stimulus, in my opinion it may be better to consider adjusting the level of reserves first without waiting to raise interest rates on a sustained basis.” The policy of predecessor Mark Carney was that the Bank should raise rates before trying to sell bonds back to the market, while Mr Bailey said he does not want high Bank of England purchases of government bonds to become a long-term arrangement. In separate comments to Sky News , Mr Bailey said the Bank’s early intervention in the coronavirus crisis saved the government from potential financial collapse.

 

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