BoE policymaker Miles opens door to a future QE extension
BANK of England policymaker David Miles yesterday sent a signal to the market that the central bank would not be averse to extending quantitative easing (QE) in the future, as he reiterated claims that the policy is beginning to achieve its aims.
Speaking at an economics conference in Northern Ireland, Miles said the reversible nature of the scheme meant the Bank would not need to be overly cautious in extending it.
“Were the policy of asset purchases to be irreversible or even very costly to reverse, that uncertainty would be a powerful reason to proceed slowly and to err on the side of doing too little quantitative easing because the costs of doing too much are large,” he said. “But QE is not irreversible.”
Miles, who along with Bank governor Mervyn King was one of three MPC members who voted in August to extend QE to £200bn rather than the £175bn that was eventually implemented, added that the policy was starting to have a beneficial effect on the economy.
But he said it was difficult to gauge the “precise” impact of QE because of the lack of definitive or reliable money supply target by which to judge its success.