The Bank of England has privately intimated to bankers that quantitative easing will be maintained. It has signaled that it may continue to acquire bonds in order to avert a pension crisis. The Bank of England initially intervened with bond purchases because multiple pension funds were in danger of default. Yesterday, Bank of England Governor Andrew Bailey told investors that bond purchases would halt on Friday of this week.
Explaining the UK Economic Crisis
When newly elected Prime Minister Liz Truss and Chancellor Kwasi Kwarteng presented their new economic policy, England’s economic crisis crumbled. The plan included an unfunded tax decrease proposal. As a result, the British pound fell significantly against the dollar. Investors have also begun to sell long-term government bonds.
The Bank of England used quantitative easing to acquire the bonds, as the sell-off threatened numerous pension systems. Despite the UK government’s plan being scaled back, the economic situation worsened. Given the high levels of inflation both globally and in the United Kingdom, a shift to quantitative easing was an unexpected decision. Bailey of the Bank of England stated that the bank will no longer engage in quantitative easing. However, it appears that it has informally indicated its intention that the easing may continue after all.
Is a Significant Crypto Rally Possible?
The macroeconomic climate continues to influence stock market price movement. Because cryptocurrency is so closely linked to the stock market, it is also influenced by the macroeconomy. The market experienced a massive sell-off as a result of central banks’ quantitative tightening. As a result, the Bank of England’s decision triggered a huge rally.
If the UK’s central bank follows through on the easing, the crypto market might see a huge spike. The crypto market, on the other hand, is more reliant on the US Federal Reserve. It does not appear likely that the Fed will begin to ease policy anytime soon. As a result, any crypto boom will be fleeting.