BOE MPC Weale: Recovery May Be Slower Than Some Hoped

–Monetary Policy First Line Of Defense If Economy Weakens Sharply

LONDON – The recovery could be slower than some people had
hoped and monetary policy should be used if the economy does weaken
sharply, new Bank of England Monetary Policy Committee member Martin
Weale told the Treasury Select Committee Tuesday.

Weale in his evidence was asked if the thought further quantitative
easing should be employed if the economy recovers less strongly than
expected. He backed the idea of using monetary policy to deal with a
further downturn.

There “may be a slower recovery path than some people had hoped,”
Weale said.

“If things were to weaken sharply then I think monetary policy
should be the first line of defense,” he added.

Weale downplayed the chance of a rapid recovery.

“The profile of recovery from the trough of recession we have seen
recently is largely similar to the sorts of things that happened in
previous recessions,” Weale said.

Weale also warned unemployment could rise further.

While “unemployment has been much weaker than people like myself
had initially feared … I can think of reasons why unemployment should
rise further,” he said.

-London newsroom: 4420 7862 7491; email: drobinson@marketnews.com

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