LONDON (Reuters) - Weak economic growth and subsiding price pressures suggest Britain’s central bank should run an extremely loose monetary policy, Bank of England policymaker David Miles said on Wednesday.
“Growth remains very weak. That’s why I think it makes sense for us to assess where the trajectory of inflation is likely to be - I think on the whole it’s downwards - and to set monetary policy in a way consistent with inflation moving back to target but also to support growth,” Miles told Sky News.
“I think at the moment that implies having a very, very expansionary monetary policy.”
Miles is the most dovish member of the nine-member Monetary Policy Committee and has consistently argued that the central bank should be doing more to support growth.
His comments suggest he is unlikely to change his stance anytime soon, as he forecast further trouble ahead.
“The growth outlook remains troubling and rather weak,” he was quoted as saying in a later online post by Sky News economics editor Ed Conway.
Although Miles acknowledged that quantitative easing might have lost some bite since the Bank first introduced the policy in 2009, he stressed his continued faith in it.
“The evidence is not compelling that the strength of the (QE) mechanism is identical to what it was then. But to me it’s clear that more asset purchases are a way of making monetary policy more expansionary,” he was cited as saying.
Miles also welcomed a recent tweak of the central bank’s mandate, which gives it clearer leeway to ignore temporarily above-target inflation. He said the change clarified the flexibility that had always existed in the remit.
Reporting by Christina Fincher and Olesya Dmitracova; Editing by Hugh Lawson