MPC’s Posen suggests printing more money

| September 29, 2010 | 0 Comments

Bank of England policymaker, Adam Posen, has suggested injecting more cash into the economy, via the quantitative easing (QE) scheme.

According to Mr Posen of the Monetary Policy Committee (MPC), more stimulus is required to help the recovery and to avoid a similar kind of slump which Japan experienced in the 1990s.

His suggestion comes shortly after fellow policymaker, Martin Weale, suggested that the Bank should consider extending the £200 billion QE programme.

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

According to Mr Weale, the economy may need to be stimulated further and one “obvious” way is QE.

Meanwhile, in a speech yesterday to the Hull and Humber Chamber of Commerce, Mr Posen said: “The case I wish to make is that monetary policy should continue to be aggressive about promoting recovery, and subject to further debate, I think further easing should be undertaken.”

He added: “My assessment instead rests upon the path of post-crisis developments having been broadly consistent with these past patterns as seen in Japan in the 1990s and in the United States and Europe in the 1930s: economic recovery following a financial crisis is a long process dominated by the interaction of unemployed resources, dysfunctional banking systems, and the degree of policy stimulus.”

In the meantime, Mr Posen said stubbornly high inflation was not a threat - disagreeing with fellow MPC member, Andrew Sentance, who has voted for an interest rate rise at the last four meetings to combat inflation.

Consumer Price Inflation (CPI) held steady at the annual rate of 3.1% in August. However, the latest figure represents the ninth consecutive month that inflation has been above the Bank’s target of 2%.

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