Sam Bowman, Executive Director of the Adam Smith Institute, commented on the Bank of England's latest announcement that they are to ease monetary policy. He said:
“The Bank of England has done the right thing in cutting rates and starting a large quantitative easing programme. The short-term risks of Brexit must not be compounded by tight money, and with inflation rates already near zero there is little risk of excess inflation.
“Some will worry that this will hurt savers. This is mistaken: savers suffer when the economy is weak and benefit when it is strong, and tight money at a time of weak economic growth would threaten to make things worse for everyone. Monetary policy is not a zero-sum game: when central banks cut rates to raise inflation they often drive market interest rates up, because that extra inflation boosts the economy overall.
“It’s also welcome news that the Bank no longer expects Brexit to cause a recession. The government should take heed of the Bank’s boldness today and consider similar boldness in tax and land-use planning reform, to help the economy grow strongly over the coming years.”
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