Monetary Policy Committee member Adam Posen has admitted the committee has serious worries about inflation but has defended its decision to introduce a £325bn quantitative easing programme into the UK economy.
Posen’s comments come as the UK recorded its first rise in inflation in six months, having stood at 3.5 per cent in March 2012.
Posen had previously forecasted that inflation would fall to 1.5 per cent by March 2011 and said that if he had made the wrong call he would switch his vote for QE and would rule out a second term at the MPC. This week’s MPC minutes showed he has switch his vote on QE.
According to The Daily Mail, Posen argued that inflation was higher than expected in March 2011 because an additional £125bn of quantitative easing has been unleashed into the UK since then.
Posen said inflation will fall to the 2 per cent target in due course.
He said: ‘In terms of accountability for my own record, I stand by what I said in March 2011.
“If I am basically wrong about the forecast, I will not seek reappointment. Of course, the inflation forecast is higher now than it was then precisely because, rightly, we did more QE.”