MPC hawk says Bank may intervene to boost economy
The Bank of England is ready to return to its programme of quantitative easing if the economic outlook worsens, a leading member of its Monetary Policy Committee signalled yesterday.
Martin Weale, one of the MPC's external members, said: "There isundoubtedly scope for further asset purchases to trigger further reductions in yields on government debt should the need arise."
Mr Weale's intervention is significant because, until recently, he was one of the MPC members who backed an increase in interest rates to head off inflation, rather than a loosening of monetary policy, which is what an extension of QE would represent. However, Mr Weale said he did not believe the time had yet come for the Bank to act.
"I do not think our August forecast or the more recent market movements since then as yet make a case for such a policy," he said.
Nevertheless, Mr Weale's shift in position will be taken as another sign that the MPC is moving closer to adding to the £200bn the Bank has already spent on QE, following the deterioration of the UK economy over the past few months.
Mr Weale said he was most concerned about the outlook for British exporters, who are struggling to cope with the slowing global recovery and especially acute difficulties in theeurozone, their biggest market.
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