New round of stimulus by Bank

The Bank of England is injecting another £50bn into the economy. They say that while many indicators are looking up there are too many uncertainties and the Euro area, Britain's main export market is at best flat.

The aim is to put extra liquidity into the financial markets, push yields (interest rates) down and this will lead to increased demand through higher consumption and investment in the economy and the recovery will be given a boost.

This new round of quantitative easing, which is being called QE3, is drawing both good and bad comments. Some feel that the good January figures for the UK economy are merely a blip and won't be sustained and the others that the 'headwinds' faced with the economy are still strong and so this is a welcome move.

Others say that this is an inflation risk and that the effect on yields is going to seriously affect savers and especially people retiring this year and in the next few years.

All policy is a trade-off and so there are always costs. A more important question is will it work? Monetary policy is a notoriously blunt instrument and has long and variable lags. There are good reasons to think that QE3 is like 'pushing a piece of string', there is no effect at the other end of the process.

The Independent covers QE3 here