Bank of England policy maker Adam Posen said the U.K. economy will be “stronger” than official data will show in the first half of the year.
“I think the economy is stronger than what that data is going to show,” he told reporters in Edinburgh today. Referring to the minutes of this month’s monetary policy meeting, he said that “it’s not so much that there a wide range of views about ’is there going to be a recession,’ but a number of people on the committee are worried about confidence shocks.”
Posen this month dropped his push for an additional 25 billion pounds ($40 billion) of bond purchases to side with the majority of the Monetary Policy Committee, who voted for no change in the plan. Bank of England officials said that the U.K. may face a recession in the first half of this year, while inflation may turn out faster than forecast.
“I was genuinely on the fence in February and March,” Posen said. “In my reading of the data there’s been a little bit of movement back from some very positive stuff compared with a month or two ago but it’s still much more positive than it’s been.”
On whether the committee will have a difficult job convincing people that the outlook for the economy isn’t as bad as the data may reflect, he said that “we just have to be honest and try to do the right thing.”
On his decision to keep the amount of bond purchases unchanged, he said “we’re not turning off the QE taps, we’re keeping the same amount of QE going but we’re not adding to that flow.”
Posen also said the recent construction data published by the Office for National Statistics were “just odd.”
“We didn’t have a terrible winter and we didn’t have falling house prices,” he said. “Somehow we had a far worse decline in construction this year than the same month last year. It’s just odd.”