BOE Tucker: Facing Real Policy Dilemma In Next Few Months

LONDON (MNI) – The Bank of England’s Monetary Policy Committee is
facing “a real dilemma” over policy in the next few months, Deputy
Governor Paul Tucker said in a BBC Radio Bristol interview.

Tucker said the question was whether the MPC should remove a little
of the stimulus it has provided. He argued against a sharp hike in Bank
Rate.

“Inflation is a worry, there’s no doubt about that, it eats into
people’s incomes and spending power and our job is to bring inflation
back to the 2% target and that’s going to take a little while. “e face a
real dilemma over interest rates over the next few months,” Tucker said.

“To bring inflation down rapidly we would have to raise interest
rates very sharply which would weaken an economy that is still
recovering,” he said.

“The question we face isn’t to make a violent increase in interest
rates, it’s whether or not to take away just a little bit of the
stimulus we’ve been supplying the economy for the last few years. So
this is a delicate balance but it’s not dramatic in either direction,”
Tucker said.

Tucker has been in the mainstream on the MPC, voting for unchanged
Bank Rate since April 2009 and no extension or reduction in quantitative
easing since November 2009.

–London newsroom 0044 20 7862 7491; email: drobinson@marketnews.com

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