Bank of England expected to roll back quantitative easing
When Fed chairman Ben Bernanke first intimated in June that the consistent influx of government funds known as quantitative easing (QE) that has kept the stock market afloat may be coming to an end, investors across the country flew into a panic. Since that initial announcement, Bernanke has backed down from his initial statement, offering reassurances that the Fed would not roll back its support until the U.S. economy had stabilized.
However, individuals with offshore assets in their investment portfolios should note that the officials from the Bank of England (BoE) are expected to discontinue their QE approach to economic recovery, The Wall Street Journal reports.
WSJ explains that the BoE is transitioning to a strategy of "forward guidance," which entails allowing central bankers to "lay bare the thresholds they believe should be met before benchmark interest rates can be allowed to rise. The hope is that they can control rate expectations—and influence asset prices—through jawboning rather than action."
According to The Guardian, a prominent U.K. publication, newly appointed BoE governor Mark Carney will be unveiling further details about this transition, including new guidance for setting interest rates.
Last month, The Financial Times reported on the BoE's potential retreat from QE, noting that members of the U.K. Monetary Policy Committee who had previously supported more bond purchases instead agreed to leave the figure as is.
Remaining abreast of such policy shifts worldwide is essential for international stock management. In addition, portfolio analysis software like SmartStops can help you limit losses by informing you of other potential risk areas in the market.