Bean says QE door shouldn’t be closed for BOE of­fi­cials

The Pak Banker - - Front Page -


Bank of Eng­land Deputy Gov­er­nor Char­lie Bean said busi­ness con­fi­dence re­mains vul­ner­a­ble and of­fi­cials should keep open the op­tion to ex­pand stim­u­lus even if its po­tency is cur­rently di­min­ished.

“Cer­tainly we haven’t closed the door for­ever on fur­ther as­set pur­chases and it would be in­cor­rect to say that we’ve de­cided they’re in­ef­fec­tive at the cur­rent junc­ture,” Bean said in an in­ter­view. “The bang for buck might be a bit less now than it was in 2009. That doesn’t mean to say that you don’t want to do any more of it, it just means that to get the same ef­fect, ac­tu­ally you have to do even more than be­fore.”

Bean spoke while re­turn­ing by train to Lon­don af­ter a two- day visit tour­ing busi­nesses and gaug­ing con­fi­dence among ex­ec­u­tives around cen­tral Eng­land. He said that the Bri­tish econ­omy is prob­a­bly grow­ing “weakly at best” and one-off fac­tors mean it might con­tract in the cur­rent quar­ter, threat­en­ing to hurt sen­ti­ment. “Par­tic­u­larly if the press choose to por­tray it as ‘Bri­tain back in re­ces­sion,’ that clearly may end up hav­ing some ad­verse ef­fects on busi­ness con­fi­dence,” Bean said. “All we can do is keep try­ing to re­state this mes­sage that there will be this tem­po­rary fac­tor de­press­ing growth in the fourth quar­ter and hope that that gets across.”

There should be fewer dis­tor­tions in the first three months of 2013 and that will help pro­vide a “a cleaner read” on the econ­omy’s un­der­ly­ing growth, he said.

Bean, 59, spoke a day af­ter the U.K. government an­nounced the ap­point­ment of Mark Car­ney as Mervyn King’s suc­ces­sor as Bank of Eng­land gov­er­nor. The deputy gov­er­nor will ex­tend his term for a year to as­sist with the tran­si­tion. He said the euro area still re­mains the “big­gest down­side risk” to the U.K as “there is al­ways the risk of dis­or­derly un­rav­el­ing.”

“This un­cer­tainty as­so­ci­ated with the euro zone I think has helped to make busi­nesses that bit more cau­tious about in­vest­ing in the U. K. at the moment,” he said. “There’s noth­ing that we can di­rectly do to af­fect events out­side our shores, whether it’s the euro zone, oil prices or what­ever,” Bean said. “All we can do is re­spond to them when they ac­tu­ally hap­pen.”

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