MPC minutes show Quantitative Easing gathering pace

The Committee reported that:

So far, around £26.5 billion of assets (of the £75 billion target) had been purchased and it would take a further two months to complete the programme. As expected, the bulk of the purchases had been of gilts, with smaller volumes of purchases in commercial paper and corporate bonds. The initial effects of the Committee’s asset purchase programme had been encouraging.

Yields on gilts had fallen by a sizeable amount following announcement of the programme, with the falls concentrated in the range of eligible maturities. Some of those falls had subsequently been reversed. It was difficult to know if the falls in yields would persist once the £75 billion programme of purchases was complete:

it was possible that some of the falls would be temporary, and only last while the purchases were being made. Alternatively, the falls in yields might increase as additional assets were purchased. There had been some early signs of improved conditions in corporate bond and commercial paper markets, with some spreads narrowing.

The latest money and credit data had been for the month of February – prior to the asset purchases. It had been encouraging that the three-month annualised rate of growth of money held by households and private non-financial companies had picked up since the start of the year. It was too early for data to reflect how the purchases of assets were being transmitted into broad money and credit and into nominal spending, and thus to enable the Committee to judge its overall efficacy.