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BOE’S Weale says evidence shows QE supports economy

BOE’S Weale says evidence shows QE supports economy
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First Published: Sun, Oct 09 2011. 04 31 PM IST

The Bank of England is seen illuminated at night in London. (file photo Bloomberg)
The Bank of England is seen illuminated at night in London. (file photo Bloomberg)
Updated: Sun, Oct 09 2011. 04 31 PM IST
London: Evidence shows that quantitative easing does support the economy and there is no reason to believe that it feeds directly into inflation without supporting growth, Bank of England policymaker Martin Weale told Sky News on Sunday.
“The work that the bank has done on the issue has suggested quantitative easing does support the economy,” he told the broadcaster.
The Bank of England is seen illuminated at night in London. (file photo Bloomberg)
When asked if the state of the economy would have been worse if £200 billion had not been pumped in, he said: “I think so. Obviously there is uncertainty about the exact impact, and equally we don’t know whether the impact in the future will be similar to what we think it was in the past.
“But I have not heard anyone suggesting that quantitative easing actually inhibits the growth of the economy, that it fails to provide support.
“Some people have suggested that it translates fairly directly into inflation without supporting economic growth, and I can’t see any reason why that should be the case, I haven’t heard of a convincing mechanism why that should be the case.”
The BoE voted on Thursday to buy £75 billion more in assets to shield Britain’s economy from the euro zone debt crisis and keep the faltering recovery going.
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First Published: Sun, Oct 09 2011. 04 31 PM IST