MPC’s Posen says UK not out of woods
THE UK economy is still teetering on a knife edge between continued recovery and the renewal of a severe recession if not outright deflation, warned Bank of England policymaker Adam Posen.
Speaking yesterday in London, the Monetary Policy Committee (MPC) member said that Britain was caught between the strong recovery outside of Western Europe and the coming austerity at home and in the Euro Area.
“If we are fortunate, our present monetary policy stance combined with the UK economy’s natural tendency to recover and with sustained global growth outside of Europe will be sufficient to get the UK to the good outcome.”
This would result in more inflation overshooting in the interim, said Posen, adding that in that state of affairs he would be “only too happy to vote for an interest rate increase”. He said that the emergency monetary stimulus had helped to create a “mild upward creep in inflation expectations”.
But he said he was not fully confident that the UK economy would continue to recover, indicating that he is not about to join fellow-MPC member Andrew Sentance in calling for rate hikes.