BoE policymaker suggests extending QE programme

| September 15, 2010 | 0 Comments

Bank of England policymaker Martin Weale has suggested that the Bank should consider extending its £200 billion quantitative easing (QE) programme.

QE, also known as printing money, is a process whereby the Treasury injects funds into the financial system to ease pressure on banks by giving them extra capital.

The Bank embarked on its QE programme in March 2009, when the economy was in the midst of its worst recession in more than five decades.

Mr Weale, who joined the Monetary Policy Committee last month, said the economy many need to be stimulated further and one “obvious” way is QE.

Appearing before the House of Commons Treasury Select Committee, Mr Weale said: “If growth is substantially weaker than I expect then it would be entirely appropriate for monetary policy to look at ways in which it could stimulate the economy further.”

Mr Weale, who replaced Kate Barker on the Committee after her term ended on 31 May, is one of four external members appointed by the Government and for the past decade and a half was in charge of the National Institute of Economic and Social Research (NIESR) – an influential think tank which provides regular updates on economic trends.

Meanwhile, Mr Weale’s comments come after fellow policymaker, Professor David Miles, warned that high inflation is a concern and it is likely to remain relatively volatile over the next few years.

Professor Miles was quotes in the East Anglian Daily Times as saying: “From my point of view on the MPC, I am particularly concerned about inflationary pressures, since it is our job to keep the rate close to the 2 percent target and it is uncomfortably above that at present.”

The Office for National Statistics (ONS) revealed yesterday that Consumer Price Inflation (CPI) held steady at the annual rate of 3.1% in August.

The latest figure represents the ninth consecutive month that inflation has been above the Bank of England’s target of 2%.

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