There could be more QE, says MPC man

The Bank restarted its QE programme in October, raising its asset purchase target to £275bn from £200bn. The purchases are due to be completed by February.

Mr Weale said that he hoped the QE programme would add 0.5 per cent to GDP, but that if this was not the case, this did not automatically mean the Bank should do more – a view that contrasts with that of the arch-dove on the Monetary Policy Committee, Adam Posen.

“It might be prudent to wait to see that the sharp fall in the inflation rate which we have been forecasting actually happens before making any further decisions,” he said at the National Institute of Economic and Social Research.

“But nevertheless, unless the economic situation improves, there is likely to be a strong case for extending the asset purchase programme after the current one comes to an end,” he added in his speech.

Mr Weale said that Britain’s economic recovery was proving slower than expected, even taking into account the scale of the financial crisis.

“The MPC’s latest forecast implies that it will probably take five and a half years for output to recover to its previous peak,” he said.

The economy needs to rebalance towards a more highly productive, export-oriented economy – but this was largely out of the Bank’s control, and would be easier when the economy was growing more strongly, he added.

Fellow MPC member David Miles told the Yorkshire Post this week that the UK is “probably in for a period of very low growth for the next few quarters”.