Bank would opt for more QE if economy worsened - Weale

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A clock displays the time just after midday, opposite the Bank of England in the City of London March 10, 2011. REUTERS/Toby Melville

A clock displays the time just after midday, opposite the Bank of England in the City of London March 10, 2011.

Credit: Reuters/Toby Melville

LONDON | Fri Aug 26, 2011 12:18pm BST

LONDON (Reuters) - The Bank of England does not see any need for quantitative easing at the moment, but does not rule it out, and would engage in further stimulus if the economy worsened substantially, Bank policymaker Martin Weale told a regional newspaper on Friday.

"As I see things at the moment, I don't think there's a case for it (quantitative easing), if I thought the economy was likely to weaken substantially further and therefore inflation was likely to come in well under target, then obviously I would change my mind," Weale told the Yorkshire Post in an interview, echoing remarks made at an event in Doncaster on Thursday.

"I certainly wouldn't want to rule it out, at the moment I don't see a need for it, but it is something that we can do if we think that the need arises," he added.

Weale said the banking system was "in much better shape than it was in 2008," but cautioned that one of the things that could trigger a need for more fiscal stimulus was if lending dried up again.

"It's not the most likely outcome I see happening, but I would hesitate to say that things are impossible. If something's happened once it would be foolish to say it couldn't happen again," he said.

(Reporting by Stefano Ambrogi; Editing by Kim Coghill)
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Comments (2)
SeaBeeUK wrote:
Good to know that the BoE doesn’t see any good reason to steal any more from savers at the moment.

Aug 26, 2011 10:35am BST  --  Report as abuse
PeeEmGee wrote:
I may be mistaken but I thought that the powers that the Labour Party gave to the Bank of England were to, largely, emulate those of the Bundesbank. That is, the BofE was given an autonomous role to ensure, primarily, that inflation was kept in check. A target of 2% was given. Inflation has been out of control for some years. I further thought that the health of economy was to be managed by parliament via fiscal policy and legislation. Am I wrong? Mervyn King seems preoccupied with attempts to deflate outstanding debt by encouraging, rather than controlling, inflation. I realise that the situation is dire but at the moment retired people are hanged if they do and hanged if they don’t; stock markets have no shown a positive return, overall, for over 10 years, dividends are poor, interest rates are almost nothing, and savings are deflated continuously. Does Mervyn King know what he is doing? Remember, the banks blew up while he was supposed to be regulating them. I always blamed Brown for everything that went wrong under his stewardship but perhaps Mervyn King should carry a heavier burden of responsibility.

Aug 26, 2011 1:04pm BST  --  Report as abuse
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