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sset prices over relatively short windows (Bernanke, Reinhart and Sack 2004). Gilt Yields respond to such policies majorly because of two reasons, firstly due to the impact gilt purchases have on yields at which various investors prefer to hold reduced supply of gilts i.e. the portfolio balance effect and secondly due to the impact that the announcement is perceived to contain about the future position of monetary policy i.e. one of the elements of expectation channel. (Spencer dale , 2010)

The variations in the OIS rates post policy announcements are a definite pointer to the extent to which policy announcements impact expectations of future position of monetary policy. OIS rates fell drastically after the initial announcements of QE, predominantly at short horizons, indicating that these announcements were the chief reason for market players to revise downwards the predicted future path of Bank rates.

After implementing QE, equity prices appreciated by over 50%, and corporate bond yields fell over 400 basis points. These variations have been vital for the economy. When asset purchases begun a year before, predictions of such outcomes would have been more than welcomed.

These movements coincided with raking up in global financial markets, which further complicated the task of specifying the UK based effects. However, it is imperative to gauge this global rally with respect to similar policies adopted by the central banks of various important countries - the interest rated were drastically slashed and the balance sheets in many countries was grossly expanded. The fact that UK capital market movement coincided with the global market movement in this period definitely implies that the domestic policy adopted had an impact.

Three major outcomes of QE was through firstly a portfolio rebalancing act because both institutional and retail investors were opting out of gilts into alternative assets, e.g. corporate bonds and equities. Secondly through enhanced market liquidity aided by acquiring more commercial paper and corporate bonds. And thirdly through their impact on expectations as acquiring more assets clearly showed the government's commitment to act which boosted confidence in the economy and reduced the chances of another fall in asset price.

A year back when QE was implemented, its success depended on whether monetary injection and increased asset prices would enhance nominal spending resulting in the 2% inflation target for medium term.

RISK OF QUANTITATIVE EASING 量化宽松风险
The main reason for failure of quantitative easing is continuation of recession despite of adding money into the system. Though Bank of England has put money into the system, but if doesn't result into the higher spending (Flanders, Stephanie, 2009). If bank is reluctant to lend money and consumers being risk averse in unstable economic condition by not spending money and saving more. As per the theory, MV=PT, rise in money leads to fall in V (circulation), leads to no benefit. This situation could lead to another round of QE i.e. putting more money into the system.

Putting more money could leads to higher inflation. QE is to take company's economy out of deflation spiral; this is done by creating inflation pressure. A small inflation is good but high inflation is disastrous (Andrew Oxlade, 2009). Inflation risk is mitigated if the economy growth outpaces t