Sean O'Grady: Mervyn King didn't quite get the temperature right

Have you ever, like I have, had trouble using the shower controls in a strange hotel?

You know how it is. You get in and start trying to get just the right blend of hot and cold for a nice, refreshing wash. You start off a little bit cold. So you turn the temperature control round a bit more towards the red end of the spectrum. Nothing. So then you twist it a bit further. Wait. Nothing. Frustrated, you push it all the way down the hot zone. Nothing for a minute, but then you get scalded and have to leap out of the shower with third-degree burns.

Obviously it's a fairly unsettling image, but I sometimes imagine the Governor of the Bank of England, Mervyn King, in the monetary policy shower, not quite getting the temperature right.

In the case of QE, Mervyn, and his colleagues on the MPC, were gradually turning the tap towards the hot end of the spectrum all through last year. The initial boost last March was scheduled at £75bn. Nothing much happened. So in May, it was extended to £125bn. Bit warmer. In August, it went to £175bn. Again a lukewarm response. So they pushed the lever to full blast – £200bn in November.

The effect so far? Tepid – GDP growth of 0.1 per cent in the final quarter of last year, a modest pick-up in spending and money growth, less on bank lending but a definite boost to capital markets, helping larger companies raise funds.

The question is what happens next. Monetary policy suffers from notoriously "long and variable lags" and there's a strong case for thinking that QE's warming effects are still to be fully felt, given that the whole programme started less than a year ago and that it was last extended only eight weeks ago.

The danger is that QE actually makes its presence fully felt later this year and early next, just as the economy begins to grow properly, spare capacity starts to get used up, and imported inflation pushes price rises way above the official 2 per cent target later on this year. Let's just hope we don't have to jump out of the shower.