LONDON (MNI) – Bank of England Governor Mervyn King said Thursday
that the Monetary Policy Committee would be ready to sanction further
asset purchases if net trade fails to pick up enough to offset the
slowing in the domestic economy.
Speaking at the Treasury Select committee, King was asked how the
MPC would respond if net trade failed to rise quickly enough as domestic
demand eased. He replied that the automatic stabilisers coming into play
would help offset that and further quantitative easing was also a
possibility.
“There are two obvious consequences of that. One is the
automatic stabilisers which would lead to the change in the level of the
fiscal deficit, so they kick in, and they are quite powerful in the
United Kingdom, with high marginal tax rates,” King said.
“The second is monetary policy where we could engage in further
asset purchases, were we to think that necessary to keep inflation on
track to meet the target.”
–London Bureau; tel: +442078627492;email: ukeditorial@marketnews.com
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