It has already thrown £125 billion of liquidity at the market through the QE programme but is unfortunately left with no clear indication of whether its unprecedented measures have made a large enough dent. Even the all seeing all knowing, seemingly omnipotent IMF is none the wiser reporting that “It remains too early to tell whether this will be enough to ultimately generate the desired increase in aggregate demand.

”The BoE’s intention of suppressing Gilt yields through its asset purchase programme hasn’t been entirely successful. Benchmark 10 year Gilt yields have actually risen since March. In defence the bank’s Inflation Report released this week suggested “[yields] were probably lower than they would have been in the absence of the asset purchase programme”. The IMF too corroborated this.

It also reported that money growth remained weak, growth in the stock of loans to households remained subdued and the stock of outstanding loans to businesses fell. The bank took the decision to raise the money supply hoping that it would be spent on new investment projects, thus creating economic growth. But the Inflation Report estimated that business investment fell by nearly 8% and dwelling investment by 12% during Q1 2009. Wait, so where is all this money going if it’s not to households and small businesses which might actually be able to spend it?

Here’s a clue; take a look at equity prices. That now infamous phase ‘green shoots of recovery’ and the emerging strength of China and India through this crisis has certainly helped in raising the risk appetite of investors. So when the BoE turned to institutions and big banks for purchases of Gilts, you could have quite literally heard their cash machines go Ker-Ching! The extra supply of money has been used by institutions to repay bank debt, restructure balance sheets and has found its way into risky vehicles such as equity and property which offer higher returns than Gilts. The shine of Gilts is fading fast. The government has to borrow billions (by issuing Gilts) in order to fund its appalling lack of fiscal prudence - and then there is the matter of just how long will the BoE remain chief buyers.

Cash is reallocated to risky assets and money is shifting between one financial instrument and another but what does that have to do with growth? No doubt rising equity and house prices will be pointed to as signs of an economic recovery but again, what does that have to do with growth? The BoE’s hope of avoiding deflation and creating economic growth through new investments and jobs has yet to materialise.

And that brings us to the Bank’s ‘exit strategy’ - the new buzz-phrase that Barron’s (part of The Wall Street Journal digital network) note as “one of the things that strike us, after observing the sorry episodes necessitating an exit strategy, is that the vast majority of them, whether in war, diplomacy, politics, romantic involvements or finance, could have been avoided by an entry strategy”. Well said!

In wanting to avoid a double-dip recession such as that characterised by America in the 1930’s, the BoE may well be cautious of suspending the unprecedented policy of QE too early. The monetary policymakers note that inflation is likely to be volatile and below target in the medium term, but also report that there are upside risks as well as downside risks. Spare capacity and unemployment is likely to depress wage and price increases whereas the upward pressure could come from Sterling’s depreciation as well as rising global energy and commodity prices if world growth is stronger than expected.

With the only evidence of success of QE being in the form of ‘lower bond yields than would have otherwise been’ and no historical precedent for the policy, the pumping in of billions of Pounds cannot go on without an end. It would appear that the Bank of England’s awkward date with QE should be approaching an end and it would do well to plan a smooth, dignified exit.

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And finally……….for those of us forced to ‘staycation’ in the UK this Summer, this story is bound get your back up. British embassies around the world are reporting a curious rise in cases of moronic travellers. A few examples - a holidaymaker in Italy called the embassy to ask where to purchase a particular pair of shoes, another called to ask “I’m making jam – what ratio of fruit to sugar shall I use?”

Perhaps the Foreign Office would do well to dispense this travel advice – “Pack brain, then passport, then leave the country.”

Have a good weekend.