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EDINBURGH (MNI) – Bank of England Monetary Policy Committee member
David Miles says he is open-minded over what the next policy move should
be but the big picture is the economy has been “flattish” and the MPC
has been right to make policy more expansionary.

Speaking to reporters Miles said the recent data have been mixed
but he refused to say if yet more stimulus would be required.

“It has been a mixed bag of data really but I think the bigger
picture is that over the last 12 months, even the last six months, we’ve
seen pretty flattish output. It looks anaemic and weak, so the right
strategy has been to make monetary policy yet more expansionary which is
what we’re doing now,” Miles said

“Let’s see where we are over the next few meetings, I’m open-minded
as to what the next move should be,” he said.

He praised the European Central Bank’s “resolve” in setting up its
bond buying plan but noted the uncertainty of its impact.

“They’ve (the ECB) have shown resolve and willing and the
quantities in which they might operate seem very large. I think we’ll
have to wait and see how it plays out,” he said.

Miles warned that the recent rise in oil prices, if sustained,
could hit the UK economy, driving up inflation.

“If oil prices over the next month or two do what they’ve done over
the past several weeks then that will have an impact on the UK. We’re a
pretty big importer of energy now,” he said.

“It has a significant impact on consumer prices and feeds through
in a big way to CPI so it will effect the inflation outcomes in the
near-term,” Miles added.

The MPC may once again choose to look through its impact in setting
policy, however.

He said the big issue for the MPC was whether a move, or expected
move, in commodity prices is “telling you something about ongoing
underlying inflationary pressures when you look beyond the immediate
impact or is it just another one of those blips in commodity prices
which, for a while, almost necessarily effects the inflation rate but
then after that actually the inflation pressures come back down to
something which we should then look through ?”

Miles was also asked in a Q and A session about the impact of
quantitative easing on sterling. He stressed its impact was hard to
measure.

“In principle you can certainly expect there to be potentially some
foreign exchange implications of quantitative easing,” he said.

He was more confident about the benefits it has had for the
corporate bond market.

“QE has had a positive impact on corporate bond yields,” he said.

-London newsroom 0044 20 7862 7491; email:wwilkes@marketnews.com

[TOPICS: M$$BE$]