–Adds Detail To Version Transmitted At 0802 GMT
–Backed QE in Oct Because of Real Risk Of Below Target Inflation
LONDON (MNI) – Bank of England Governor Mervyn King has said that
the BOE’s Monetary Policy Committee almost sanctioned quantitative
easing at its September meeting but instead decided to wait and see if
markets calmed down.
King also told parliament that the latest round of quantitative
easing is designed to boost demand, spending and output and raise
inflation.
“Any monetary policy easing is going to have the effect of
expanding demand, spending, output and ultimately inflation. That it was
what monetary policy easing is designed to do,” King said.
“When we undertook the next round of asset purchases we did it
because we thought that there were real risks that inflation looking
ahead would fall below the (2%) target, we wanted to offset that,” he
added.
King told the Treasury Select Committee that the minutes of MPC’s
meeting showed “we came very close to voting for further asset purchases
in September.”
“We did not take the step forward … because at that September
meeting we were very conscious of there being significant news in
August, particularly in financial markets and it could have been that
that volatility worsened over the next month,” King said.
“We thought that the underlying position might improve … There
was a possibility that the volatility would dampen down,” he said.
TSC chairman Andrew Tyrie summoned King and BOE Deputy Governor
Charles Bean following the Monetary Policy Committee’s decision to
sanction stg75 billion of further QE at its October meeting.
Tyrie said the issues he wants to tackle are the effectiveness of
QE, and what roles the Treasury and the BOE should play in stimulating
the economy.
–London newsroom 0044 20 7862 7491; email:
drobinson@marketnews.com/wwilkes@marketnews.com
[TOPICS: M$B$$$,M$$BE$,MT$$$$]
