–Adds Detail To Version Transmitted At 1505 GMT
–BOE Posen: Inflation Has Peaked; If Europe Craters Overwhelms UK
–BOE Posen: Inflation On Track To Be Below 2% A Year From Now
LONDON (MNI) – The Bank of England Monetary Policy Committee is
leading everyone else in sanctioning further quantitative easing and UK
inflation is on track to fall below 2% a year ahead, MPC member Adam
Posen told CNBC today.
“We’re leading everybody else. Other people are going to get where
we are because we’re doing the right thing,” Posen said.
The MPC member highlighted the threat the euro zone crisis poses to
the UK and warned that a messy ending to the crisis would “overwhelm”
the country’s economy.
“Britain is big enough… we control our own destiny for the most
part. If Europe absolutely craters then that overwhelms us,” he said.
“That’s part of the reason we’re doing it (more QE),” he added.
Posen took the lead on the MPC in voting for more QE, but was
isolated up until September. His eight colleagues joined him in voting
for a fresh stg75 billion in QE at the MPC’s October meeting.
The extra monetary stimulus comes at a time when the most recent
inflation data showed the key CPI measure rose to 5.2% in September –
way above the MPC’s 2% target.
But Posen insisted that inflation was heading back below target.
“Well, it’s peaked… I’ll bet you two pence, I’ll even bet you
threepence, that a year from now it’s going to be below 2%, I said that
a year ago and it’s still on track to do that,” he said.
The extra stg75 billion of QE corresponds to around 5% of GDP, and
Posen said it was right the for the BOE to do this amount.
Posen’s comments on inflation falling below target in a year,
however, suggest that unless the economy recovers more robustly than he
is currently forecasting he is likely to vote for additional
quantitative easing.
Posen is in New York to attend the Economist’s Buttonwood
gathering.
–London newsroom: 4420 7 862 7491; email:
drobinson@marketnews.com/wwilkes@marketnews.com
[TOPICS: M$B$$$,M$$BE$]