–Adds Detail To Version Transmitted At 1011 GMT

LONDON (MNI) Bank of England Monetary Policy Committee member Adam
Posen has said that the MPC must remain ahead of the curve as it
attempts to chart a course through the ongoing economic storm currently
battering global financial markets.

“Things are moving that fast in a downward direction that we have
to be one step ahead in terms of policy,” Posen told the Lancashire
Evening Post during a regional visit here.

The Bank of England Monetary Policy Committee united at its October
meeting behind the decision to inject a further stg75 billion into the
economy through asset purchases, according to the minutes of that
meeting, released today.

All nine MPC members voted in favour of a further stg75 billion in
QE, with the minutes revealing some thought that a larger amount may be
warranted. The MPC considered asset purchases of between stg50 bln and
stg100 bln, but concluded that the differences in scale of QE were
outweighed by uncertainty over the inflation outlook.

While most analysts had expected a unanimous vote, some had
speculated that there would be one dissenter, most probably BOE Chief
Economist Spencer Dale. The minutes, however, revealed that the MPC
believed there was a “compelling” case for more QE, with the economic
outlook having deteriorated.

“The weaker outlook for, and increased downside risks to, output
growth meant that the margin of slack in the economy would probably be
greater than previously thought. This made it more likely that inflation
would undershoot the 2% target in the medium term,” the minutes said.

Posen is also reported as saying that QE is a less “accurate”
policy tool than interest rates.

“It is maybe a slightly less accurate ammo than interest rates but
we definitely know it gets you there,” Posen said.

Posen also said that the Bank of England had underestimated how
much higher inflation was going in its 2009 Inflation Reports, but said
that the current spike in inflation is only temporary.

“Right now, this one shot spike in inflation we are seeing is very
temporary, it is a peak that coming down and it is going to come down
pretty fast in the first half of next year,” he is quoted as saying.

Posen’s comments follow Tuesday’s inflation data print which showed
CPI hit a three year high of 5.2% in September as utility bills soared.

The most significant contributions to the upward push on the CPI
rate came from sharp increases in utility bills during the month, the
report showed.

The data show that the cost of housing, water, electricity, gas and
other fuels jumped 8.6% in the year to September, up from the 5.1%
increase seen in August and marks the fastest rate of increase since
February 2009.

–London newsroom: tel+44 207 862 7491; email:
wwilkes@marketnews.com/drobinson@marketnews.com

[TOPICS: M$$BE$,MT$$$$]