Bank of England monetary policy committee member Martin Weale told BBC Radio Newcastle last week the case for increasing quantitative easing is stronger after news the economy has slipped back into recession.
MPC member David Miles was the only committee member to vote for an increase to the £325bn QE programme last month and he told Bloomberg Television last week: “The weakness of demand, given the amount of spare capacity in the economy, still made a strategy of having monetary policy even more expansionary the right one. On reflection, that seems the right strategy.”
Miles added inflation, up from 3.4 to 3.5 per cent in February, would be higher than expected in the near term but is likely to fall below the BoE’s 2 per cent target by the end of the year.
He said: “The inflation outlook in the very near term is for slightly higher inflation than I had thought but the bigger picture remains one where the domestically generated inflation pressures in the UK are low. More likely than not, inflation will go back to the target level and quite likely sit beneath it if you look beyond the next six to nine months.”
Miles had called for the QE programme to rise by £25bn to £350bn.
Fellow MPC member Adam Posen voted to keep QE at £325bn despite having urged for QE to be increased since joining the MPC in September 2009.
Emba group sales and marketing director Mike Fitzgerald says: “The economy is not getting any better, so I see no other option but to offer more support in the form of QE.”