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Bank of England rules out extending quantitative easing programme

Mervyn King alerted the Treasury committee of risks from rising wage pressures once more normal economic conditions returned


Bank of England policymakers have played down the prospects of more electronic cash being injected into the UK economy.

The Bank announced in early February that it was extending its quantitative easing programme by another £50bn but Bank governor Mervyn King said there appeared to be little expectation of that being boosted again.

Taking questions from Commons cross-party Treasury Committee, King said: “By and large, I don’t think there’s any hard and fast expectation that we’re inevitably going to do much more.”

“We will take whatever action we think is appropriate and at that point, expectations will adjust.”

His fellow policymaker Martin Weale sent a similar message in a speech on Wednesday. Weale said when predicting the future path of inflation, which some critics say has been pushed up by QE, “the price of oil is a particular worry”. He also flagged up risks from rising wage pressures once more normal economic conditions return and added that he did not think there was likely to be a further case for QE once the Bank’s current programme is complete.

Referring to the path of interest rates implied by bond markets, he said: “The yield curve suggests that an increase in bank rate is not fully priced in until mid-2014. But, obviously, if the very real risks I see about inflation do materialise, then it is perfectly possible that the first rise will come earlier than that.” © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds