LONDON (Reuters) - Martin Weale, a member of the Bank of England’s monetary policy committee, said the cons of targeting nominal GDP outweighed the pros, according to an interview posted on The Independent website on Wednesday.
He accepted that NGDP may be more appropriate in other countries, but when asked if the cons would outweigh the pros in Britain, he said: “I think in the current circumstances they do.”
“Our experience is very different from that of the U.S. and indeed Canada,” he said, referring to recent levels of inflation in Britain.
Mark Carney, governor-designate of the Bank of England and currently Bank of Canada governor, is seen as more likely to favour a flexible inflation target than abandon it.
Weale also signalled that he remained open to the possibility of further quantitative easing under the right conditions.
“I certainly wouldn’t say that I see QE as parked,” he said. “With the policy stance as it is we expect the inflation rate to come close to target over the horizon. In those circumstances the case for strong further support would be if you thought it could be made without any substantial effect on inflation.”
Britain’s economy shrank by 0.3 percent in the final quarter of 2012, as the country risks entering a triple-dip recession.
Reporting by Costas Pitas; editing by Andrew Roche