Further case for QE extension unlikely
The Bank of England's Dr Martin Weale speaks at Cass
Dr Martin Weale, external policy maker at the Bank of England, said he does not think there is likely to be a further case (for an extension to QE) once the current programme is complete in May 'as recent indicators of economic activity have been positive'. Dr Weale was speaking as part of the Dean's Lecture series last night at Cass Business School.
Dr Weale surprised the audience by indicating for the first time that the Bank of England may need to raise interest rates earlier than the 2014 projection due to growing concerns over inflation.
He said, "The monthly rate of inflation, which fell below a level compatible with the target at the end of last year, seems likely to be higher than is consistent with the target in the first half of this year. The price of oil is a particular worry.
"The yield curve suggests that an increase in Bank Rate is not fully priced in until mid-2014. But, obviously, if the very real risks I see about inflation do materialise, then it is perfectly possible that the first rise will come earlier."
His comments came at the end of a lecture entitled 'From retailer's paradise to shopper's strike', which examined the reasons behind the slump in consumption in the UK, including monetary policy, age effects, unemployment and social security reform.
Cass's Dean, Richard Gillingwater CBE, moderated the lively Q&A session after the lecture where students and practitioners questioned the prominent economist about the Bank of England's policies on quantitative easing, interest rates and inflation.
Watch the full lecture with Dr Martin Weale.