QE extended as Greece agrees to cuts

10 February, 2012


The Bank of England has extended Quantitative Easing, but only by £25bn, as Greece finally agreed budget cuts with the EU.

The QE decision was widely expected, so while not good news for the Pound, there has not been a huge negative effect on exchange rates. There was a chance that £50bn would be injected, which would have been likely to make exchange rates fall, so we must wait to see if further extensions are made in future months.

Meanwhile in Greece, the government finally agreed to savage austerity cuts needed to secure their second bailout, which gave the Euro some strength and brought Euro money transfer rates down in the afternoon. Markets will watch closely for reaction in Greece where strikes are already planned, but if the bailout happens in March we would expect to see some stability return to the single currency area, and Euro strength as a result.