February 18, 2009
Britain likely to start ‘printing money’
The Bank of England is likely to begin
printing money to ward off deflation, a leading British economist said.
The question is
when will -- rather than will -- the Bank of England engage in quantitative easing, Howard Archer, chief economist at HIS Global Insight said to The Times of London.
The practice known as
printing money involves bank purchases -- frequently purchases of government bonds -- to increase the money supply.
The Consumer Price Index in Britain fell to 3 percent in January but the bank forecast it would fall to near zero until 2012.
Increasing the money supply is intended to ward of deflation, a dynamic in which prices fall, prompting consumers to stop spending in hopes prices will continue to drop.