The Bank of England could do much more to foster the recovery of the economy, Adam Posen, an outgoing member of the bank's Monetary Policy Committee said in an interview to the Financial Times.
The central bank could be much more effective in fostering economic recovery if it ditched "anguished religious ethics" over what it considered reasonable intervention, Posen was quoted as saying during the interview published on Sunday.
"I have no question in my mind that what we're doing with QE is preventing things from getting much worse, but that doesn't mean you couldn't have an additional or better instrument," he said.
He said the MPC should have access to the necessary tools to keep inflation close to its 2 percent target.
"I really feel the MPC does have to have the authority to make up its mind on what instruments it wants to use and not be constrained by either the BoE executives saying, 'We don't want to do x' or 'That's the financial policy committee's territory'," Posen told FT.
In a write-up in Dailymail on Saturday, BoE Governor Mervyn King urged bankers to take lessons from the Olympics.
He said that banks should know that an objective that is worth attaining requires years of hard work. Banks should focus less on making money in the short term, and pay more attention on building businesses to serve their customers' interests over the longer term.
He said that the Games' impact on confidence may give the economy a boost, but warned that it is not going to alter the outlook of the economy.
"If the rest of the world were growing normally, the rebalancing and recovery of our economy would be much easier. But it isn't," he wrote. "Even the rapidly expanding emerging market economies are slowing, and the problems of the euro area continue with no obvious end in sight."
by RTT Staff Writer
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