The impact of quantitative easing on government yields has been minimal. After printing ₤50 billion, the 30 year gilt yield is actually four basis points higher than in early February, when the Bank started its insane policy of printing money.
The most impact has been on the 10-year bond. Its yield has fallen 40 basis points. This contrasts with a 500 basis point cut in the bank rate.
The Bank of England's explanation for this abject failure of QE is ominous. In today's inflation report, it said
"Projections for government borrowing were revised upwards by more than the market expected in the Budget in April, contributing to an increase in expectations of bond issuance; this may have raised yields."
What does this mean? The Bank of England is printing cash to reduce bond yields, and trying to put downward pressure on all interest rates, including those faced by corporate borrowers. At the same time, the government is issuing more debt, pushing yields the other way.
This is policy incoherence; it is fiscal crowding out, and above all it is the road to higher inflation, macroeconomic instability and falling living standards.
Welcome to the mad world of New Labour.