Bank's Bean - monitoring whether more QE needed

By Fiona Shaikh and Christina Fincher

LONDON (Reuters) - Policymakers are watching to see whether they need to do more to boost the economy, although it looks as if the worst of the downturn may be over, Bank of England Deputy Governor Charles Bean said on Monday.

In a raft of interviews at the start of a nationwide tour to explain the central bank's 125-billion-pound quantitative easing programme to the public, Bean said withdrawing stimulus too early risked killing off a recovery.

"When we change Bank rate we expect it to take nine months to work through. The quantitative easing effects are likely to take that long or even longer," Bean was quoted as saying on "Thebusinessdesk.com" web site.

"But we are monitoring it to see whether we do more. Things are looking at least as if they are heading in the right direction," he said.

The comments drove gilt futures to a session high, providing comfort to investors that the central bank was not about to start unwinding its purchases after its decision last week not to expand the programme caused ructions on markets.

NO TIME TO UNWIND

The Bank has taken unprecedented measures to help Britain recover from its deepest downturn in decades, slashing rates to close to zero and pumping billions of pounds into the financial system to try to kick-start lending to households and firms.

There has been little evidence yet the measures have helped lending although recent surveys have suggested the economy may be starting to stabilise, raising expectations that months of ultra-loose policy may soon come to an end.