LONDON (MNI) – Any increase in quantitative easing measures by the
Bank of England could have a significant impact on inflation levels in
the UK, a senior BOE policy maker says Thursday.
In an interview with the Daily Mail published today, Martin Weale,
a member of the Monetary Policy Committee, warns additional QE causes
him concern over the stickiness of inflation.
“I am concerned about the stickiness of inflation,” Weale said.
“It is certainly not self-evident to me in the light of the
apparent stickiness of inflation that substantial extra support for the
economy would be compatible with the inflation target,” he added.
Weale explained his concerns, noting the contradicting factors at
work.
“There are two things pulling in opposite directions. On the one
hand, economic growth is weak and the economy looks to be more or less
flat. On the other hand, inflation gives a sense of being becalmed at
something above our target,” he told the paper.
Despite the National Institute for Economic and Social Research –
an Institution Weale worked for before his MPC appointment – declaring
the UK to be out of recession, the policy maker is not so sure.,
“I think most people are expecting fairly good growth in the third
quarter. There was the Olympics effect and then you have the bounce back
from the second quarter,” he says.
“The Jubilee depressed output in the second quarter so you get an
automatic bounce back. But if we talk about underlying growth then I
think the economy is flat,” Weale said.
–London Bureau +20 7862 7499; ukeditorial@marketnews.com
[TOPICS: MT$$$$,M$X$$$,M$$FI$,M$$BE$]
