The programme of quantitative easing (QE) has certainly got off to a positive start, as evidenced by the sharp drop in bond yields. However, its wider impact on bank lending, economic activity and inflation remains highly uncertain. At this early stage, we doubt that the Monetary Policy Committee (MPC) will want to increase (or indeed reduce) the amount of QE that it has set in motion. Eventually, however, it could end up spending far more on asset purchases than the £75bn announced so far.
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