WARWICK (MNI) – Bank of England Monetary Policy Committee
member Adam Posen said the cetral forecast in the February Inflation
Report was pretty close to his own.

The February Inflation Report show inflation rising to around 1.8%
in two years time and up to 1.9% in three years’ time, close to the 2.0%
target. This projection has persuaded some analysts the MPC will not
carry out any more quantitative easing, and although Posen is seen as
the arch-dove he did not take issue with the forecast.

Speaking to reporters here Posen said “November’s forecast and this
forecast are very close to where I would be … as opposed to preceding
forecasts where I was very clear about where there was a strong
difference between us.”

The MPC sanctioned Stg50 billion of QE at its February meeting.
Posen declined to comment on whether he had favoured more, with next
week’s minutes set to reveal the MPC’s voting.

“You will find out the votes. Whatever the votes are if you look at
what we are forecasting, assuming the policy we have now put in place,
that gets us pretty close to target with the risks pretty balanced,” he
said.

“It is hard to complain about that if you are an inflation
targeting central bank and the world isn’t collapsing,” he added.

His comments, following a speech at the Warwick Economic Forum,
make clear he is no longer at odds with the broad views of the majority
on the MPC. Posen had led the way in calling for more QE, with the
second wave of QE finally relaunched in October.

Asked about the growth forecasts in the Inflation Report, which
show GDP rising from its near flat level in Q4 to around 3% towards the
end of the forecast period, Posen again expressed no criticism of it.

“As opposed to some past forecasts I am quite comfortable with this
one,” Posen said.

Posen cited a recent speech he made in Nottingham in which he
argued UK productivity had been damaged long term by the financial
crisis.

“As I stressed in the Nottingham speech … as most of the
committee believe we are going to go back to the trend rate of
productivity growth,” he said.

“I don’t think we are going to get there tomorrow and the Eurozone
could throw us off horribly, as we all know, but I think we are going to
get, within the next year or two, back to trend productivity growth in
which case things improve,” he said.

On the Eurozone Posen said “I think the LTROs of the ECB have made
a material difference to the liquidity conditions, to the financial
conditions and, secondarily, to the monetary conditions.”

–London newsroom: 4420 7 862 7491; email: drobinson@marketnews.com

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