A member of the Monetary Policy Committee says an interest rate cut would be a better economic boost than further quantitative easing.
Speaking to the Scottish Herald, Martin Weale says there is no need for further monetary stimulus at the moment but he would prefer to see interest rates fall ahead of another round of asset purchases.
He says: “If it were clear that the interest rate could be reduced without finding some banks got themselves into a position where they had to reduce lending because of the effects of an interest rate cut on their profits, and if it were clear a reduction in interest rates would be like all other reductions in the interest rate, I think I would probably prefer that to more QE, if I was choosing between them.”
Yesterday the Bank of England launched a robust defence of its QE programme claiming it had helped growth and saved jobs and businesses.
Weale defended the paper claiming the economic situation would have been worse without QE.
Weale backed the funding for lending scheme saying it would have a “reasonably powerful effect”.