LONDON (MNI) – The Bank of England sees no need for further
quantitative easing at present, but it could become necessary if banks
become more reluctant to lend again, Bank of England’s Monetary Policy
Committee Member Martin Weale told regional newspaper the Yorkshire Post
Friday.
Although he said that he couldn’t rule out another round of asset
purchases, Weale also said that he thought that the British banking
system was in better health than it was in 2008.
“But again, one of the things that could create a need for more
quantitative easing would be if banks did become more reluctant to lend
again,” Weale is quoted as saying.
“If something happened once it would be foolish to say it couldn’t
happen again,” he added.
In the interview Weale elaborated on why he pulled his call for a
rate hike at the MPC’s August meeting.
“Earlier in the year, the forecasts we were producing that
inflation would be brought close to target were based on the market
profile for expected future interest rates, and those implied a fairly
sharp increase in interest rates over the next two to three years,” he
said.
“Now I thought, in light of that, it would be sensible to start
with the increase in interest rates a bit earlier than the markets were
expecting, because then if things turned out worse than we had feared we
would at least have made a start. If things turned out better, we then
needn’t increase as rapidly as the market was expecting,” he added.
Weale’s comments follow a speech he gave Thursday in which he said
that more asset purchases would become the appropriate policy if
inflation pressures weaken substantially further.
“Substantial further weakening of inflationary pressures would, of
course, mean that additional monetary support rather than a withdrawal
of that support would be the appropriate policy,” Weale said in a speech
in Doncaster Thursday.
–London bureau: +4420 7862 7491; email: ukeditorial@marketnews.com
[TOPICS: M$B$$$,M$$BE$,MT$$$$]
