New York, New York (PressExposure) August 13, 2009 -- "Source One International": The Bank of England has shocked markets by announcing that it is to extend its program of quantitative easing by another Â£50 billion taking the total of newly created money to Â£175 billion.
Sources close to analysts at "Source One International", say that the firm was not surprised by the move given the lack of substance behind recent economic data that has been regarded as bullish by many commentators.
One source suggested that although the economic data was positive, it couldn't make up for the absence of the essential ingredient - the consumer - in any recovery in Europe's second largest economy. The consumer is responsible for 70% of the UK's GDP and with unemployment rising and many consumers attempting to reduce debt, it was unlikely that this vital component would return in numbers sufficient to bolster economic growth by any significant margin for some time to come.
"Source One International" reportedly believes that the BoE's decision was based on recent figures showing that the UK's economy contracted significantly more than commentators had been expecting.
Sterling plunged sharply against other major currencies as the announcement was made. "Source One International" remains convinced that the UK economy faces strong headwinds in its recovery attempts and continues to advise clients to avoid UK property and gilts.