Bank of England study defends quantitative easing

A new study by the Bank of England has claimed that pension takers have not been disadvantaged due to the central bank’s policy of quantitative easing (QE).

Even after admitting that the scheme benefited top 5 per cent of households the most, the bank claimed that most people were in a better position than today. It said that the QE helped increase the price of gilts and reduced the yields.

“By pushing up a range of asset prices, asset purchases have boosted the value of households' financial wealth held outside pension funds, although holdings are heavily skewed, with the top 5% of households holding 40% of these assets,” the Bank said.

The chain reaction resulted in lower borrowing costs for companies and households and it also increased the net wealth of asset holders. Both of these factors helped in stimulating spending. The bank also claimed that the lack of the policy would have left savers and pensioners in a more difficult financial condition.

The pensions industry has responded by saying that the findings of the bank’s report are a sharp contact to the realities on the ground.