Bank "open-minded" about more stimulus

 (Reuters) - The Bank of England has an open mind on the need for more quantitative easing, Governor Mervyn King said on Wednesday, after the central bank forecast below target inflation and a stronger rebound from recession.

A week after the Bank raised its asset-buying programme by another 25 billion pounds to 200 billion pounds, its quarterly Inflation Report suggested policymakers see some signs of recovery but have not ruled out further action to boost the economy.

That more dovish than expected outlook, with interest rates likely to remain at a record low of 0.5 percent for some time to come, drove bond markets higher and sterling lower and surprised many analysts who had thought the Bank's QE expansion was over.

"It certainly would be wrong to conclude we've decided that. We've made no judgement at all, we've a completely open mind whether to do more asset purchases or not. What we did last week was not a first step towards anything," King said.

The Bank's decision last week halved the pace at which it had been buying assets -- mainly government bonds -- with newly-created money, a policy aimed at lifting Britain out of its sharpest downturn in decades.

Back to main news page