LONDON (MNI) – Bank of England Monetary Policy Committee Member
David Miles says in an interview with the Financial Times published
today that the UK economy needs at least another stg50bn more QE.
“Do we need a more expansionary monetary policy? ‘Yes’. Should it
be a substantial change in asset purchases? ‘Yes’. Is stg50bn a
substantial number? ‘Yes it is’. Could one know in advance what is
exactly the right amount to do? ‘Absolutely not'”.
Miles also said that he did not think that the coalition
government’s deficit-reduction plan was to blame for the weakness of the
UK’s economic recovery, adding that he thought that high commodity
prices had pushed up inflation and reduced household incomes.
He also said that rising bank funding costs had led to an increase
in the cost of credit to businesses.
“A pretty substantial increase in the costs of funding for most UK
banks then got passed through in the form of some increases in the costs
of lending to corporates, and pretty clearly some increase in the costs
of mortgages. That has been pretty unhelpful,” he said.
Miles also said that the BOE’s new Extended Collateral Term Repo
program will help the operation of monetary policy as it would remove
banks’ fear that they needed to stockpile cash rather than lend.
“It’s a complement to one of the levers we’ve got, rather than a
substitute because [the MPC] has run out of effective levers,” he said.
–London newsroom: 4420 7862 7491; email: wwilkes@marketnews.com
[TOPICS: M$B$$$,M$$BE$]
