BOE’s Fisher Expresses ‘Open Mind’ on QE, City A.M. Says

Bank of England Markets Director Paul Fisher said the central bank could increase asset purchases again in May depending on the economic outlook, according to an interview with the London newspaper City A.M.

“We may get surprises, positive or negative before then which causes us to change our mind, but at the moment I would have a completely open mind going into the next round whether or not we need to” do more quantitative easing, Fisher was quoted as saying in an edited transcript on City A.M.’s website.

U.K. policy makers led by Governor Mervyn King this month agreed to pump 50 billion pounds ($78.7 billion) into the nation’s economy over three months, boosting the target for bond purchases to 325 billion pounds. Fisher said in the interview that “it was still worth doing a bit more QE” to eliminate the risk of a “severe recession,” the newspaper said.

Adding 50 billion pounds, instead of a larger or smaller amount, gives policy makers more freedom to decide whether to buy additional securities later, Fisher said. “If you look at our inflation forecast” with that amount, “we were just about back to being evenly balanced around the inflation target by the end of the horizon,” he said.

Fisher said that “you never hear a very good reason why we should” buy assets other than gilts.

The official said the economic outlook is “incredibly uncertain,” and that he feels “slightly more comfortable about the inflation outlook than the outlook for growth,” according to City A.M.

Fisher, a member of the Bank of England’s Financial Policy Committee, also said the decision-making body is taking the right approach in guiding the U.K.’s banking system. Critics can’t see “what the benefits will be once we get to a level where everyone can perceive that the banking system is safer, there’s less chance of public money being used to bail people out,” Fisher said, according to the newspaper.

To contact Bloomberg News staff for this story: Scott Lanman in Beijing at slanman@bloomberg.net; John Simpson in Toronto at jsimpson12@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.