BoE's Posen says Bank still finalising economic forecasts

Date: Tuesday 24 Jan 2012

Following a speech on Monday night at Nottingham Trent University, Bank of England (BoE) monetary policy committee (MPC) member Adam Posen indicated that the central bank will vote for further asset purchases if new forecasts for growth and inflation support that course of action.

He thus called attention to the fact that the Bank is still in the process of finalising its new quarterly economic forecasts, which will be ready in time for the next meeting of the MPC, in February.

Posen also mentioned how things are now a little better, thanks to actions taken by both the BoE and the European Central Bank, as well as an improvement in growth prospects in the US and China and reduced tensions in bank funding markets.

Of particular interest, the policy maker indicated that should those parts of the economy (such as the financial industry) which did not shed as many workers as would have been expected during the downturn do so now, then "inflation will be coming down in the next couple of years and unemployment will unfortunately likely rise some over the next couple of years, but not hugely.”

“If that is our forecast," he added, "the MPC is right to have done quantitative easing to try to get us from having inflation be too low and employment too low in two to three years’ time, and the committee is right to consider, as we will be doing in a few weeks, whether we need to do more.”

Lastly, the central banker minimised the importance of the exact pace at which any further asset purchases would be carried out.

AB

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