Bank of England Markets Director Paul Fisher said policy makers expanded their asset purchase program by the smallest amount he thought was needed in October and they can do more if required.
“If we think we need to do more, we can do more,” Fisher told lawmakers at a hearing of the Parliament’s Treasury Committee in London today. The 75 billion-pound ($116 billion) increase in the bond-purchase target in October “was the smallest amount I was sure we’d need to do and then we could come back to it and see if we wanted to do another round.”
Some Bank of England officials have said the bank may need to expand stimulus, though they have signalled they may prefer to wait until the current round of bond purchases is completed in early February. Fisher said that while policy makers could accelerate the rate at which they buy gilts in their quantitative-easing program, the risks would increase.
“We could go faster; I think it’s about whether what we are doing is the right rate,” he said. “The faster we go, the more the risk is some of our operations don’t quite deliver the amount of gilts we want to purchase.”
Policy maker Martin Weale said last week there may be a “strong case” for policy makers to expand stimulus again as the economic outlook darkens and the central bank forecasts that inflation may slow to below its 2 percent target in two years.
“We won’t learn that much more about the impact of asset purchases over the 3 1/2, four months that we’re doing it, but we will learn about the economy, about the development of the situation in the euro zone,” Fisher said. “We’ll get to take a fresh look at the medium-term position and then decide whether or not we actually need to do more.”
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