Bank of England Expected to Stay the Course

Amid positive economic indicators, analysts in the United Kingdom tentatively believe the UK began to exit the recession during the third quarter. Part of this rise in the economy is caused by the London Olympics and positive manufacturing data. As the nation faces the possibility of an economic recovery, the Bank of England has decided to avoid buying anymore government bonds until at least November.

Despite the potentially positive outlook, many investors still believe that the quantitative easing program will grow in size by the end of 2012. Although quantitative easing seems likely, it appears as if it will not be happening in the near future. Reuters published a survey of economist that was taken recently. Only one of the 59 economists surveyed believed that the interest rate would remain unchanged at the end of the two-day meeting.

Current Plans

Earlier this year, the Bank of England released a 50 billion pound extension of their QE program. These quantitative easing measures were intended to run through the month of November. As November quickly approaches, investors are hoping for news of another extension.

Additional measures may not be necessary for the United Kingdom. The current Funding for Lending Scheme is intended to address credit problems and help get money flowing through the economy. Central bankers have stated previously that they were confident that this program would work to stimulate the economy.

The minutes of the meeting are expected to be a unique portrayal of the rate-setters debate. Amusingly, the last meeting held showed one rate-setter arguing for more quantitative easing measures back in November. Despite hopes of new quantitative easing measures by some, the Bank of England’s deputy governor believes that QE measures will not be enough. Some of the bite has been taken out of the measures in recent months and additional policies have not been as effective. No matter what the Bank of England decides, the economy will still have a long time before it is completely recovered.

Iran’s Currency Falls

The Iranian rial fell 17 percent during Monday’s trading session. Fuelled by economic sanctions and dubious practices by the nation’s money changers, the rial is currently being exchanged at 34,500 rial to the United States dollar. Previously, Iran’s currency was being exchanged at a rate of 29,600. Since last year, the Iranian currency has fallen a total of 80 percent.

Much of the drop in the rial’s value can be attributed to a drop in oil exports and Western economic sanctions. These sanctions are intended to make it impossible for Western nations to import goods or perform financial transactions with the embattled nation.

As the rial fell, Iranian censors began to remove information about the depreciation from the web. Currency websites operated in Iran were shut down and real-time currency data was blanked out. Analysts say that part of the fall can be attributed to mismanagement by various currency centres in Iran. Although many Iranians have lost millions of United States dollars over the last 24 hours, the currency may improve as speculation subsides.