| UK MPC's Fisher supports more QE but notes its limits |
| 28.11.11 03:28 | |
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In an interview with The Sunday Times, MPC member Paul Fisher gave a clear signal that he is likely to vote for more QE in the coming months. He said he thought the £75bn of asset purchases announced in October was "the smallest amount I was absolutely sure we needed to do. I still think we might need to do some more. I don't have to decide that now." Some commentators have suggested QE could be expanded by a massive amount, but Mr Fisher indicated that there would be a point at which the MPC would begin to question the effectiveness of the policy: "Suppose we went to the extreme and doubled to £400 billion. If we had done that and it still wasn't working, I think we would want to stop and try something else," he said. Mr Fisher also indicated his support for the current mix of fiscal tightness and monetary looseness, emphasising the importance of a deficit reduction plan that financial markets considered credible. He said the euro area sovereign debt crisis had already done serious harm to the economy and noted that the risk of a disorderly resolution meant the UK outlook was particularly uncertain at present. Mr Fisher's support for more QE is unsurprising as he has long been towards the dovish end of the MPC spectrum. However, his description of a doubling of the stock of asset purchases to £400bn as "extreme" is interesting when one bears in mind that another £75bn expansion in February, which is what we expect, would take the stock of purchases to £350bn (approaching 25% of annual GDP), and might be taken to imply that the MPC's appetite for additional QE beyond February is limited. source: BarCap |
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