Outgoing monetary policy committee member Adam Posen is calling on the Bank of England to do more to boost economic growth and lending.
Speaking to the Financial Times Posen says quantitative easing should be used to help small business and mortgage lending and not just to buy government bonds.
He says: “I have no question in my mind that what we’re doing with QE is preventing things from getting much worse, but that doesn’t mean you couldn’t have an additional or better instrument.”
Posen argues that the MPC should be willing to hold any assets and not concern itself too much about swaying into other areas such as fiscal policy.
He says: “As long as the central bank isn’t monetising government debt in the primary market – directly buying from the government so it can expand fiscal policy – I don’t think it really matters that much what assets the central bank acts on.”
The Bank of England voted for £50bn more QE in July bringing the cost of the programme to £375bn.
He is leaving the MPC on September 1 to head the Peterson Institute for International Economics in Washington and will be replaced by former Confederation of British Industry chief economist Ian McCafferty.