–Tells Paper That He Sees No Need For More Stimulus At Moment
LONDON (MNI) – Bank of England Monetary Policy Committee Member
Martin Weale says that he would prefer cutting rates to more
quantitative easing so long as such a move didn’t impact on the banks.
Weale made the comments to the Glasgow Herald, a day after an
interview with a French newspaper was published in which he said that a
cut might have ‘perverse effects’ and could harm the position of certain
banks.
However, Weale reiterated that at present he did not see a need
for further monetary stimulus:
“At the moment, I don’t think I do … I think the right thing in
my job is to look at the situation each month.”
But Weale made clear to the Herald that the MPC will continue to
review the case for a rate cut:
“I think, if it were clear that the interest rate could be reduced
… without finding some banks got themselves into a position where they
had to reduce lending because of the effects of an interest rate cut on
their profits (and) if it were clear a reduction in interest rates would
be like all other reductions in the interest rate, I think I would
probably prefer that to more QE, if I was choosing between them.”
However, he added: “I certainly, and I would imagine my colleagues,
would want to be very clear an interest (rate cut was the) right thing
to do before we did it.”
Weale’s comments follow those of BOE Governor Mervyn King who said
at a recent press conference that cutting Bank Rate could undermine the
position of certain building societies and would not be likely, in any
case, to have a major stimulus effect.
–London Bureau +20 7862 7492; dthomas@marketnews.com
[TOPICS: MT$$$$,M$X$$$,M$$FI$,M$$BE$]
