King says MPC, not politicians, decides on QE

LONDON (Reuters) - Bank of England Governor Mervyn King brushed away a suggestion on Wednesday that the Conservatives could force a swift end to the central bank's quantitative easing policy if they are elected next year.

Conservative leader David Cameron -- on course to win an election due to be held by mid-2010 -- told his party early last month that the Bank would soon have to stop effectively printing money lest it spark inflation.

Since then, the Bank has expanded its quantitative easing policy by 25 billion pounds to 200 billion and Cameron has said he respected the central bank's independence.

Asked at a news conference whether any Conservative concerns about QE might influence policy, King said the Bank set monetary policy independently.

"Not unless the arrangements for monetary policy and the Bank of England change. Given the current arrangements, that's a matter that we decide," he told reporters.

Conservative Treasury spokesman George Osborne said in a speech at a Reuters Newsmaker event last month it was not the party's intention to interfere in monetary policy.

"Quantitative easing is a matter for the central bank," he said.

Extensions of quantitative easing require approval by Britain's finance ministry, which to date has been a formality.

King told the news conference that the Bank had an open mind about whether it would order further quantitative easing after the existing 200 billion pounds is spent by February.