Bank of England: £200bn QE raised inflation by up to 1.5%

The Bank of England has estimated its £200bn asset purchase program has raised inflation by as much as 1.5%.

In the latest quarterly bulletin released today, the Bank used a variety of methods to assess the impact of QE on inflation and growth in the UK.

It concluded CPI inflation was likely between 0.75%-1.5% higher as a result of the asset purchase program, after it boosted asset prices and GDP growth.

The full range of esimates of the impact of QE on inflation in the report were between 0.75% and 2.5%

The Bank conceded the figures are an estimate and are "highly uncertain" but it nevertheless gives a rough indication of the impact of printing money.

In the report it added economic growth had also been given a boost from QE.

Authors Michael Joyce, Matthew Tong and Robert Woods - from the Bank's Macro Financial Analysis Division - said: "If we compute the range across the different estimation methods, this would suggest that QE may have raised the level of real GDP by 1.5% to 2%."

They added despite the uncertainties over the forecast, the analysis suggested the effects of QE were "economically significant".

The estimations suggest much of the recent rise in inflation - CPI is currently at 4.5%, well above the 2% target - could be sort-lived. This is in line with previous comments from the Monetary Policy Committee (MPC) headed by Mervyn King (pictured).

However, the report added more QE would not necessarily have the same impact.

"The economic and financial circumstances in which further asset purchases or sales are made may be very different from those that prevailed in early 2009, so it cannot be assumed that the magnitude of the effects will necessarily be the same," it said.