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King hints at QE resumption

Date: Tuesday 23 Feb 2010

King hints at QE resumption

Bank of England governor Mervyn King has hinted the UK's quantitative easing programme may restart again if the UK economy takes another downturn.

This month's meeting of the Bank's Monetary Policy Committee paused the £200bn programme, but King indicated he is concerned about the weakness of the global economy and its impact on UK exports.

"My particular concerns at present derive from the state of the world economy. Recovery in our largest export market -- the euro area -- appears to have stalled," he said.

"This nascent recovery is fragile," he said. "The tensions that underlay the build-up of large world imbalances have not been resolved," he added.

King told the Treasury Select Committee that ratings agencies were also looking for a “detailed explanation” of how Britain intended to reduce its budget deficit.

Explaining his decision to keep the QE programme on hold, David Miles, an external MPC member, told the committee that the decision on whether to increase QE in February had been for him, very finely balanced - the Committee voted 9-0 in favour of keeping it on hold.

"It's a decision that is finely balanced, it's one we'll come back to in future meetings," he said.

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