View more on these topics

Posen says UK may need more QE

Monetary Policy Committee external member Adam Posen says he is considering voting for more quantitative easing at the next meeting of the committee.

In an interview with MNI Deutche Borse Group, Posen says he may have been wrong about the effectiveness of the last rounds of QE and the strength of the economy.

The MPC voted to expand its asset purchase scheme by £75bn last September and by £50bn in February. Posen says this has had less of an effect on mortgage interest spreads and lending to small businesses than he expected.

Posen voted against further QE in April and is expected to have voted against it in May’s meeting, the minutes of which are yet to be released. But, now he suggests he may join MPC external member David Miles in calling for another round next month.

He says: “I had been hopeful in the last few months that after we did an additional £125bn [of QE] that was getting close enough. And now I am debating whether I was premature to  think that.

“I personally have had to downgrade my estimate of the bang-per-pound of this last round of QE from what I though it was going to be and that is one of the major components of why I am less optimistic now that when I started to vote for no change in policy.”

Before the Q1 GDP growth figures were published showing the UK had returned to a technical recession, Posen said he believed the “economy was stronger than what the data is going to show”. He now says the economic weakness is genuine rather than the result of “odd” construction data or volatile energy output.

“I still think the weak data somewhat overstates it but given the revisions to the construction data, given the downward moves in the business surveys it is not just the data, the underlying strength of the economy is weaker,” he says.

Recommended

Credit Suisse mulls JOHIM sale

Credit Suisse is considering the sale of its UK private client wealth management business JO Hambro Investment Management. JOHIM was launched in 1986 by the Hambro family. The firm was sold to Credit Suisse in 2001, but it has remained a private entity from Credit Suisse Private Banking. According to the FT, a person with […]

Prison break

Much has been written about the plight of the so-called mortgage prisoners and there will be much more to come. Consumers could be forgiven for not being aware of the problem that is storing up and it will hit hard unless something radical changes in the short term. I shall not list all the scenarios […]

1

Fitch cuts Greek rating and warns of mass downgrade

Greece has been downgraded by Fitch Ratings as concerns heighten that the country will leave the eurozone, while the agency has warned other members of the bloc could see their ratings cut after the next Greek election. Greece’s long-term foreign and local currency issuer default ratings have been lowered one notch from B- to CCC […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment