BRUSSELS The Bank of England is unlikely to move quickly from a very loose to a tight monetary policy, and any further bond buying by the Bank would not risk hurting liquidity, Britain's debt chief said on Friday.
The Bank opted on Thursday not to pump more cash into the economy.
But the markets expect it to print more money in early 2013 and revive its government bond-buying programme. <BOE/INT>
"Clearly it is unlikely that the bank would go from a very loose monetary policy to a tight monetary policy," Robert Stheeman, chief executive of Britain's Debt Management Office, told Reuters in an interview.
He said liquidity had held up "remarkably well" given the scale of the BoE's quantitative easing - 375 billion pounds' worth of bond purchases.
"The market has been exceptionally efficient in adjusting to the entrance to this and has not shown signs of liquidity stress," Stheeman said.
"If anything, the conditions are as good as they have been for a very long time. I see no signs of concern at the moment."
The finance ministry said on Friday that it would use revenue from the central bank's bond buying to reduce its short-term debt issuance.
That move equated to a small loosening in monetary policy, the Bank said.
(Editing by Hugh Lawson)