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Broadbent's speech increases QE possibility

09-27-2011 14:07 BJT

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Broadbent's speech increases QE possibility

The newest member of the Bank of England’s Monetary Policy Committee (MPC), Ben Broadbent has said that the weak global economy is putting downward pressure on inflation and that sterling is likely to remain weak for some time.

His speech at Thompson Reuters London headquarters paves the way for the Bank of England to apply another round of quantitative easing (QE) as his comments support tis as a monetary policy weapon in the bank's armoury.

He said that inflation is likely to be held back by: "... slow growth in the United States, the sovereign debt crisis in the Eurozone and its knock-on effects on the cost of finance for UK and European banks".

Howard Archer from IHS Global Insight said: "Today’s speech at Thomson Reuters by MPC member Ben Broadbent and his accompanying comments are supportive to mounting expectations that the Bank of England will engage in further Quantitative Easing (QE) in the near term. Most notably, Mr. Broadbent notes that the “international environment is clearly disinflationary”

Following his speech Mr Broadbent answered questions that appeared to show his position changing with regard to quantitative easing. He said that he “was reasonably close” to voting for more QE at the September MPC meeting and that it would not take much more of a deterioration in the economic situation to get him to favour more QE. He also said that more QE would help the economy and might help the banking system.   

 

Editor:James |Source: CNTV

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