Bank of Eng­land can do more if slump per­sists: Miles

The Pak Banker - - Front Page -


Bank of Eng­land (BoE) pol­icy maker David Miles said there is more the cen­tral bank can do to boost growth if the re­ces­sion­ary con­di­tions grip­ping the UK econ­omy per­sist.

"We may need more stim­u­lus," he said in an in­ter­view on Sun­day. "That will de­pend on how the head­winds hold­ing back growth play out." The bank's Fund­ing for Lend­ing Scheme "will have some pos­i­tive im­pact as we go into next year, but if it turns out that not enough has been done, that the econ­omy's go­ing to stay in a re­ces­sion­ary state and that's go­ing to drive in­fla­tion down, there is more we can do. We have not run out of am­mu­ni­tion," he said.

Bank of Eng­land Gover­nor Mervyn King gave a gloomy as­sess­ment of the econ­omy last week, say­ing gross do­mes­tic prod­uct may shrink in the cur­rent quar­ter and that the road to re­cov- ery will be "long and wind­ing." He held out the prospect of fur­ther as­set pur­chases af­ter the Mone­tary Pol­icy Com­mit­tee voted this month to halt the pro­gram at 375 bil­lion pounds ($596 bil­lion.)

Miles said pres­sure on wages had al­lowed of­fi­cials to keep mone­tary pol­icy at this "very ex­pan­sion­ary set­ting" and cau­tioned against tight­en­ing con­di­tions too soon.''

"It would be a mis­take to try and get back to more nor­mal mone­tary pol­icy too quickly when the re­cov­ery that we've seen has been pretty ane­mic," he said.

Miles said he ex­pects the forces that have hob­bled the econ­omy since the 2008 fi­nan­cial cri­sis to di­min­ish. The squeeze on per­sonal in­comes from ris­ing com­mod­ity prices is com­ing to an end, mak­ing him "guard­edly op­ti­mistic" that con­sumer spend­ing will pick up over the com­ing year, he said.

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