Bank may hold off on QE, says Fisher

Asked if he had given up on the quantitative easing (QE) programme, Mr Fisher was quoted as saying in the Sunday Times: “I don’t think the need to rebuild balance sheets has gone away. If forward guidance gives more confidence it may be we can hold off QE until it falters or something else happens.”

The central bank has spent £375bn on government bonds and kept interest rates at a record low of 0.5 per cent to prop up the economy in the wake of the financial crisis.

Mr Fisher voted for more QE for much of 2013 but held off at the last two meetings. There has been speculation among economists that he and fellow policymaker David Miles resumed voting for more QE at last week’s policy meeting.

A majority of the BoE’s policymakers has voted against new bond purchases since late last year.

Governor Mark Carney, who took charge of the central bank in July, has a policy of giving a clear sense that rates will not rise for a long time. It is meant to boost confidence, encourage spending and investment and help the recovery.

Mr Fisher said early signs suggested households and businesses are “getting the message” on the policy. Markets may need more persuading, although the bank doesn’t want to “get into a great to and fro” with them, he said.

“It’s going to take time for the markets to think this through,” Mr Fisher said. “Some contacts have said it is complicated. But it is not a complicated policy.

“It might be complicated for people holding positions — if we’d just said we’re not going to change interest rates for three years, it would have been very easy to take a view against that.”

Mr Carney said last month that the bank did not plan to raise interest rates before unemployment fell to 7 percent - something he forecast would take until late 2016. However, markets doubt this time scale and have brought forward their expectations for a first rate rise.

Mr Fisher, the bank’s executive director, markets, said stronger data and surveys in recent months suggested “policy is finally kicking in”.