Bank’s Posen to take up role at top US think tank

Mr Posen plans to step down to head a leading US economic think tank.

He will become the next President of the Peterson Institute for International Economics, a Washington-based research institution which studies international economic policy.

Mr Posen is a leading advocate of the Bank’s programme of quantitative easing asset purchas- es.

His three-year term at the Bank expires on August 31.

Chancellor George Osborne and Bank Governor Mervyn King congratulated Mr Posen and thanked him for his work.

Mr Posen was the only one of the nine-member committee to have consistently voted for more stimulus during most of 2011.

The Bank restarted its quantitative easing programme in October last year, taking its total asset purchases to £325bn.

More recently, Mr Posen became concerned about Britain’s persistently high inflation, leading him to drop his call for additional asset purchases in April.

This move led many investors to rethink their views on the likelihood of more stimulus from the Bank.

However, in an interview which was published yesterday before it was confirmed that he had accepted the role at the Peterson Institute, Mr Posen said he might have been premature in dropping his call for extra stimulus last month, because the underlying economy may be weaker than he thought earlier this year.

In an interview published by newswire MNSI, Mr Posen also said he was not sure the UK had avoided falling into a Japan-style downturn. “I had been hopeful in the last few months that after we did an additional £125bn (quantitative easing) that was getting close to enough. And now I am debating whether ... I was premature to think that,” he was quoted as saying.

The BoE restarted its quantitative easing asset purchases last October, but halted the scheme this month.

Mr Posen said he felt the latest round of QE had less impact than the initial £200bn programme, which was why he dropped his call for additional stimulus.

But he said he may have underestimated the weakness of Britain’s economy, which fell back into recession in the first three months of this year.

“I still think the weak data somewhat overstates it but given the revisions to the construction data, given the downward moves in the business surveys ... it’s not just data, the underlying strength of the economy is weaker,” he said.

He added that inflation was higher than expected because of energy prices, and that while core inflation was proving to be sticky, that too would eventually subside.