Gieve Sees ‘Substantial Chance’ BOE Expands Stimulus on Thursday
John Gieve, a former deputy governor at the Bank of England, said the central bank may expand stimulus this week as the recovery struggles to gain traction.
The nine-member Monetary Policy Committee halted bond purchases in November and has shifted its focus to the Funding for Lending Scheme, which aims to stoke growth by providing banks with access to cheap funding. Gieve said policy makers may question if they’ve done enough at their meeting this week.
“I think they will approach this week’s meeting with the question: are we sure that FLS is enough, have we done enough?” Gieve said at Fathom Consulting’s Monetary Policy Forum in London today. “And I would find it very difficult, if I was on the MPC, to sign up to that.”
All 43 economists in a Bloomberg News survey forecast that the MPC will leave the target for QE at 375 billion pounds ($590 billion). The meeting starts on Feb. 6 and the central bank will announce the decision at noon on Feb. 7.
“There’s a substantial chance they could do something,” he said. “It seems the announcement effect is considered key now and since it would be unexpected, that could be large.”
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