QE programme ‘may still be on cards’

Economic recovery remains fragile and more quantitative easing could yet be needed if deflation becomes a risk, Bank of England policymaker Paul Fisher said.

By The Newsroom

Published 22nd Jun 2011, 07:00 BST

Britain’s recovery is struggling to gain traction after a shock contraction at the end of last year.

Mr Fisher’s comments follow a dire outlook from Bank of England governor Mervyn King, who warned last week about tough years ahead as the economy readjusts following the burst of the credit-fuelled housing bubble.

“If we get stuck in a deflationary rut it’s not clear we have sufficient ability to get out of that quickly,” Mr Fisher said.

“I’ve said in the past it (QE) is still very much on the table as one of our potential policy actions, and it’s certainly not ruled out, and people need to be aware of that.”

Only one member of the Bank’s policy panel, Adam Posen, has voted in favour of expanding the QE programme to pump more money into the UK economy since March 2009. Minutes of June’s meeting, due today, are not expected to show another member voting in favour.

Bank of England Britain