LONDON, Aug 17 (MNI) – The following are key comments from Bank
of England Monetary Policy Committee members so far in August.

MPC Member DAVID MILES, interview with Dow Jones, Aug 15:

“There could be circumstances under which I would judge the right
policy would be to embark on further asset purchases but that’s not how
I’ve seen things thus far.”

Miles said he would vote for more QE if it looked like inflation
would “fall substantially beneath the target level and sit there.”

BOE Governor MERVYN KING at the August 10 press conference
following the publication of the BOE’s Inflation Report (official
transcript).

On Quantitative Easing:

“I think that whether we want to tighten policy, or whether we want
to loosen monetary policy further, we have tools available to do it. We
can raise Bank Rate or we can increase our asset purchases according to
the direction in which we want to go. And I see no impediment to doing
either of those courses of action.”

On what is the “trigger” for more QE:

“The outlook for inflation.”

On the risk more QE could “backfire” and fuel higher inflation:

“I see no reason to suppose that it will backfire, or that it will
suddenly go from a position in which we think domestically generated
inflation is close to zero and below the level consistent with the
target, until suddenly you carry out a small amount of asset purchases
and suddenly you’re projected into a world where some people say we’re
close to Zimbabwean levels of inflation.”

On Growth:

“The biggest risk on the downside to growth in the UK comes from
the world economy, and hence to our net trade position – exports.”

“What we can see … is a distinct weakening around the world – not
just in the industrialised world, but also in Asia – the slowing of the
world economy, and that undoubtedly will make the export picture more
difficult.”

On a US Federal Reserve style pledge to keep rates low-for-long:

“I see no reason for the MPC to do it. The current market
expectation of where Bank Rate will be in 2013 is actually very close to
where it is now, so market expectations have already got to that point
without our needing to make any so-called commitment.”

“Monetary policy must have the discretion to move, and that’s why I
think, if you read carefully the FOMC’s statement, they left themselves
the freedom to adjust monetary policy over that two-year period if
conditions change.”

On the debt crisis:

“The problems of indebtedness are large; they’re not easy to
tackle, but we have to face up to it and find our way through it. And I
think this is the challenge that we’re seeing this year.

2008 was not the end of the crisis; it was merely one stage of it.
So now we’re going through another stage before, I hope, eventually
we’ll come to the end of it.”

BOE Deputy Governor CHARLES BEAN at the Aug 10 Inflation Report
press conference on the damage to the economy’s output potential:

“Over the course of the past year in the light of the behaviour of
productivity, we’ve tended to shift the balance of our judgement towards
viewing the impact of the downturn on capacity as being relatively
persistent and not a purely cyclical factor.”

“We have a high degree of uncertainty about what the spare capacity
in the economy is, but our assessment is that at the current juncture is
that the underlying rate of productivity growth has been very low over
the past couple of years and essentially that the recession has led to a
relatively long lasting hit on the economy’s spare capacity – on the
economy’s potential output.”

“The implications of that – you would expect – is that there’s less
downward pressure on inflation because of the margin of spare capacity;
and correspondingly that there will be less margin for rapid growth
before you start seeing inflationary pressures pick up.”

“We assess that there’s a three in five chance that the current
level of GDP could be revised up by one percentage point or more.”

“The question is – could that explain some of the key puzzles in
the data? One of those is the one that I was already referring to with
Jeremy about productivity and the apparent mismatch with business
surveys. Another one is why net trade has been apparently on the weak
side, given how much sterling has fallen.”

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

[TOPICS: M$B$$$,M$$BE$]