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BOE's McCafferty says more rate cuts on way if economy worsens -Times

Published 08/08/2016, 10:11 PM
Updated 08/08/2016, 10:20 PM
© Reuters. Ian McCafferty, Monetary Policy Committee member of the Bank of England speaks during a Reuters interview at the Bank of England in London

(Reuters) - Bank of England policymaker Ian McCafferty said more quantitative easing was likely to be required if the U.K.'s economic decline worsens, the Times reported on Tuesday.

"Bank rate can be cut further, closer to zero, and quantitative easing can be stepped up", McCafferty wrote in an op-ed for the Times.

The Bank of England cut interest rates last week for the first time since 2009, revived its bond-buying program and said it would take "whatever action is necessary" to achieve stability in the wake of Britain's vote to leave the European Union.

McCafferty said he believes a more gradual approach should be taken towards monetary policy since the information about how the economy has reacted to the June 23 referendum is still very limited.

McCafferty, one of four external members on the nine-person Monetary Policy Committee, had opposed raising the target for quantitative easing government bond purchases to 435 billion pounds ($565.24 billion) from the 375 billion total reached in late 2012.

He also said in the newspaper that the fall in the pound in recent months, and the resulting rise in import prices, was expected to lead to an overshoot of CPI inflation relative to the 2 percent target lasting at least until 2019.

Most Monetary Policy Committee (MPC) members expected to cut Bank Rate again this year to a rate "close to, but a little above zero", if the economy performed as poorly as forecast.

© Reuters. Ian McCafferty, Monetary Policy Committee member of the Bank of England speaks during a Reuters interview at the Bank of England in London

($1 = 0.7696 pounds)

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