The Bank of England today announced an extension of its asset purchase programme to the tune of £50bn, bringing the total value of the stimulus package so far to £375bn.
Markets experienced a huge boost when the Bank announced the first round of QE at the peak of the financial crisis. Our data shows that the FTSE All Share index rose more than 30 per cent in 2009 in what is now referred to as the QE bull run.
Performance of index in 2009
Source: FE Analytics
While QE has boosted markets in the past, the effect is usually short-lived and people are rightly beginning to question its impact on the wider economy.
Hargreaves Lansdown’s Richard Troue commented: "The stimulus measures can be likened to a wave that investors are waiting to surf."
"With each passing injection of QE the wave gets less and less powerful until eventually the tide goes out completely and we are left with a completely flat market."
Back in 2009 headlines were made when the Bank stepped up its QE programme to a then enormous-sounding £75bn. The nonchalance with which another £50bn has been thrown on the heap is an indication of the severity of the current predicament.
CF Miton's Martin Gray, who had one of the best records during the 2008 financial crisis, told FE Trustnet back in May that he could not see the value of pursuing any further QE.
"I think we’re beyond the point now where quantitative easing will have a big effect," he said.
"It’s having a shorter and shorter impact. We’ve got a real slowdown to contend with, which I don’t think a lot of investors realise."
Where the news of additional stimulus would previously have been met with widespread optimism, the tide of opinion is turning.
The Daily Mail website ran an article today asking whether quantitative easing "just boosted bank profits", while one reader referred to it as "quantitative thieving".
Dr Ros Altmann, director-general of Saga, commented: "With a double-dip recession, falling bank lending, large numbers of unemployed and rising borrowing costs, we must question whether QE has had the desired effect."
"Following fresh banking scandals this week, it is especially difficult to understand why we are doing more easing which benefits the banks more than any other area of the economy."
"QE may well have shored up bank balance sheets but this does not boost the economy when banks are failing to lend on reasonable terms."
The other major area of concern is the corrosive effect the stimulus measures are having on savings and pensions.
Altmann added: "QE has reduced over a million pensioners’ incomes via annuity and drawdown income falls."
"These effects destroy jobs and growth as they reduce spending for a growing proportion of the population, so it seems that policies designed to provide a temporary boost to our flagging economy could have actually had the opposite effect.”
However, with global growth showing no signs of improvement, and no room for loosening of monetary policy, the Bank has little choice.
Azad Zangana, European economist at Schroders, said: "Against a backdrop of continued austerity, we expect the UK economy to stagnate at best over the next 18-months and the Bank of England to return later this year with even more quantitative easing."