Further round of quantitative easing 'possible'
Sunday 09 October 2011
There is "quite a lot of scope " for a further round of quantitative easing, a senior member of the Bank of England's Monetary Policy Committee said today.
Martin Weale said that while central banks should not be seen as the solution to the "world's problems", a third round of QE was possible.
His comments came following the recent decision by the Bank to boost its QE programme - effectively printing more cash - from £200 billion to £275 billion and hold interest rates at 0.5%.
The move, dubbed QE2, is the first change to the programme since November 2009 and provided the clearest signal yet that the Bank thinks Britain is on the brink of a double-dip recession.
Speaking to Dermot Murnaghan on Sky News today, Dr Weale said that with interest rates so low, the Bank could still pump more cash into the system as it tries to stimulate economic growth.
He said: "There is quite a lot of scope for further quantitative easing. Before the purchases that we announced last week, the amount of Government debt in the system was actually higher than it had been before the earlier bout of quantitative easing.
"There is quite a lot more that could be done but at the same time I think one has to recognise that central banks can't be expected on their own to resolve all of the world's problems."
Dr Weale also denied the measure simply led to inflation without stimulating the economy, claiming the situation would be worse without the second round of QE. But he acknowledged there was "uncertainty" about the impact of QE.
"I have not heard anyone suggesting that quantitative easing actually inhibits the growth of the economy, that it fails to provide support," he added.
"Some people have suggested that it translates fairly directly into inflation without supporting economic growth, but I can't see any reason why that should be the case.
"I haven't heard of a convincing mechanism why that should be the case. So the further quantitative easing is to provide further support for the economy.
"Obviously the future is uncertain and we don't know how much support will be provided but I certainly think it is an appropriate response to a weakening economic (situation)."
- 1 Tidal launch: The most pretentious lines from Alicia Keys' valedictory speech
- 2 Britain First 'acting like Ukip henchmen' by invading meeting of activists in revenge for pub protest against Nigel Farage
- 3 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 4 Tidal: Jay Z's Spotify rival streaming service criticised for making wealthy artists even richer
- 5 Brixton squat flats now costing up to £3k per month show how out of control rent is in London
Britain First 'acting like Ukip henchmen' by invading meeting of activists in revenge for pub protest against Nigel Farage
Costa Concordia: Shipment of Mob drugs was hidden aboard cruise liner when it hit rocks off Italian coast, investigators say
Brixton squat flats now costing up to £3k per month show how out of control rent is in London
A new (old) cure for MRSA? Revolting recipe from the Dark Ages may be key to defeat infection
Turkey power cut: Prime Minister says nationwide blackout could be caused by terrorists
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
Revealed: Putin's army of pro-Kremlin bloggers
Negotiable: Recruitment Genius: This leading supplier of compliance software a...
£24000 - £30000 per annum: Recruitment Genius: The Associate System Engineer r...
Negotiable: Recruitment Genius: An Executive Assistant is required to join a l...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...