UK and U.S. Bankers Leaping in the Dark

Yet all the signs are that the Bank of England and America's Federal Reserve are preparing to make such a punt, given the gloomy outlook for their economies. This week both central banks put out minutes of their last policy meetings. Both make grim reading. The Fed's minutes are one long litany of all that ails the US economy – employers not hiring, banks not lending, consumers not spending. Put those pieces together and you get the picture of an insipid recovery, with the economy not growing anywhere near enough to bring down dole queues. The statement ends with the assurance that Ben Bernanke and his colleagues are ready "to provide additional accommodation ... to support the economic recovery". The Bank's minutes are not as emphatic, but own up to "a reduction in growth prospects". Since interest rates in the US and the UK are practically at zero, that leaves central bankers with one big option: more quantitative easing. The US is likely to go first, with the UK probably following next year.