BoE's Weale says case for more QE remains

LONDON (Reuters) - Weak gross domestic product data this week strengthens the case for more Bank of England stimulus, but this has to be weighed against above-target inflation, The Bank policymaker Martin Weale said on Friday.

Revised official data this week showed that the economy contracted by 0.3 percent in the first quarter, a bigger fall than the earlier -0.2 percent estimate.

After the first estimate was released, Weale said it strengthened the case for more Bank asset purchases - though he did not vote for more at May's Monetary Policy Committee meeting.

Asked in a BBC interview about his reaction to the latest data revision, Weale said it confirmed his view that British economic output had been flat or falling slightly for a while.

"I said when those (preliminary Q1 GDP) figures appeared that I thought they strengthened the case for further support for the economy, for further asset purchases," he said.

"At the same time, of course, we have to remember that although we had recent good (inflation) news ... nevertheless the inflation rate is 3 percent rather than 2 percent and it's been above target for quite a long time," Weale said.

Separately, Weale said that he was "sure" Britain could withstand the impact of a possible Greek exit from the euro zone, based on what it had survived over the past 100 years.

He did not want to be drawn on alternative stimulus to buying gilts, but said the transmission mechanism from lower gilt yields to other asset prices was "much murkier".

(Reporting by David Milliken and Olesya Dmitracova)