Bank's Governor to face grilling over QE decision
Sir Mervyn King will be called to account before Parliament today for the decision of the Monetary Policy Committee (MPC) to inject £75bn into the British economy at a time when inflation is running more than double the Bank of England's target.
The Bank's Governor will give evidence to the Treasury Select Committee on the Bank's decision to restart its programme of Quantitative Easing.
Andrew Sentance, who left the MPC in May, argues that the Bank is making a serious error in extending its programme of UK government bond purchases and suggests the committee should force the Governor to explain the Bank's poor record in forecasting the rate of inflation over recent years.
Mr Sentance said: "The first question I would ask the Governor is: When inflation has been persistently over target and underestimated why are you so you so confident that inflation is coming down to below target?" He also said that Sir Mervyn should be grilled on what he calls a "bias" in the MPC's stance on inflation.
He said: "You were incredibly resistant when I pointed out the upside risk to inflation, but at the slightest twitch of downside risk you changed policy." Mr Sentance argues Sir Mervyn bears a personal responsibility for the QE decision. "He [King] is a very influential figure on the MPC. He would have played a very significant role in persuading others."
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