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/> QUANTITATIVE EASING BY BANK OF ENGLAND 英国央行量化宽松政策
Economic slowdown has restricted lending and reduced demand and output felled. Main Challenge was to bring aggregate demand and supply to normal. The Bank of England aims to maintain a stable inflation rate of 2%, set by Government. Banks cut the interest rate during slowdown to boost the consumer spending and to reduce the risk of inflation falling beyond the target (bankofEngland.co.uk, 2009). Bank of England has cut the bank rate from start of October 2008 to 0.5% in March 2009. (Michael Joyce et al, 2010). Interest rate of 0.5% is lowest in banks of England's 305 years of history (bbc.com, 2010). But cutting the interest rate didn't ease the credit crunch. To ease the monetary situation further, Bank of England began a programme of asset purchasing known as quantitative easing in March 2009 with the aim of injecting money in to the economy and meeting the inflation target (Michael Joyce et al, 2010). Most of the assets purchased are government bond gilts [2] and other asset purchased was corporate bond. These purchases have expanded the Bank's balance sheet as a proportion of nominal GDP to three times its level before i.e. nearly to 15% GDP.

Bank of England purchased 200,000 million pounds of assets by Feb. 2010. This policy expands the central bank's balance sheet in order to increase the money in the economy (Bernanke and Reinhart, 2004).

With this policy, Bank of England has objectives:

Quantitative easing will reduce the cost of capital on households and businesses

It will improve the capital position of the bank

It will stimulate the growth in money supply to real economy.

The purchase of asset has raised the monetary base but growth in lending activity was slow in 2009 and is improving in 2010 (European economic forecast, 2010). Quantitative Easing came to halt as inflation rate was rising rapidly in 2010 and has overshot the target of bank of England of 2%.

IMPACTS OF QUANTITATIVE EASING 定量宽松政策的影响
Impact of QE is a humongous two hundred billion pound question. There are various approaches to classify the impact of QE; one way to assess the impact of acquiring assets would be by considering the rise of broad money.(include theory of broad money) A vital reason underlying the asset purchase programme(QE) is a mechanism running from appreciating money balances onto higher asset costs and nominal spending. This mechanism can be simplified using a process of portfolio rebalancing of which the products of different assets adjust for the purpose of willing holding higher level of money balances. The same mechanism if expressed in a monetarist approach, the assets acquired would then work through measures of money disequilibrium which would then increase additional spending. Sometimes these frameworks might be presented as conflicting but essentially they share the same fundamental as why monetary policy at zero bound can spur nominal spending(Spencer dale , 2010)

Banks desire to reduce leverage coupled with the decline in nominal spending means that had monetary injection been absent, broad money would have definitely been much weaker. But this is also indicative of the amount of new debt and equity raised by the UK banks in this period, along with retained profit, totalling over 85 billion pound.

The impact of QE announcements on a