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Wednesday, the Bank of England's Monetary Policy Committee member Adam Posen said the rate-setting body can extend its quantitative easing if situations in the U.K. economy warrant such a move.
"The idea is we have left the door open," reports quoted Posen as saying in a panel discussion in London on unwinding QE. "That doesn't mean we are going to do more quantitative easing."
This month, all nine policy makers of the central bank voted to pause the GBP 200 billion asset purchase programme. But, they have said the bank would be able to provide further stimulus if it becomes necessary. The bank completed the GBP 200 billion asset purchases financed by the issuance of central bank reserves during the month.
"There is a very real scenario, which the Governor has spoken about, in which if things don't work out and we have a damaged banking system and there is a deflationary shock more QE is the right thing to do," Posen reportedly said. He added that the form of the extended measure would depend on the nature of the shock. "But there are other scenarios we have to worry about. And ideally none of this comes to pass and we have to start worrying about tightening in the near future."
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