The Financial Market Impact of Quantitative Easing in the United Kingdom
by Michael A. S. Joyce, Ana Lasaosa, Ibrahim Stevens, and Matthew Tong
Bank of England
This paper investigates the impact of the Bank of Englandís quantitative easing policy on UK asset prices. Based on analysis of the reaction of financial market prices and model-based estimates, we find that asset purchases financed by the issuance of central bank reserves - which by February 2010
totalled £200 billion - may have depressed medium to longterm government bond yields by about 100 basis points, with the largest part of the impact coming through a portfolio balance effect. The wider impact on other asset prices is more difficult to disentangle from other influences: the initial impact
was muted, but the overall effects were potentially much larger, though subject to considerable uncertainty.
JEL Codes: E43, E44, E52, E58.
(PDF, 49 pages 1059 kb)