BOE’s McCafferty Indicates Additional Rate Cuts Possible If Economy Deteriorates – Times By Reuters

Bank of England policymaker Ian McCafferty indicated that an increase in quantitative easing might be necessary if the U.K. experiences a deeper economic downturn, as reported by the Times.

In an opinion piece, McCafferty noted, “The bank rate can be cut further, closer to zero, and quantitative easing can be stepped up.”

Recently, the Bank of England lowered interest rates for the first time since 2009, reinstated its bond-buying program, and stated that it would take “whatever action is necessary” to maintain economic stability following the referendum in which Britain voted to leave the European Union.

McCafferty believes that a cautious approach to monetary policy is warranted due to the limited information available regarding the economy’s response to the referendum held on June 23.

As one of four external members on the nine-person Monetary Policy Committee, he had previously opposed raising the target for government bond purchases under quantitative easing from £375 billion to £435 billion.

He also mentioned that the recent decline of the pound and the corresponding rise in import prices are expected to push the Consumer Price Index (CPI) inflation above the 2 percent target, possibly lasting until 2019.

Most members of the Monetary Policy Committee anticipate another cut to the Bank Rate this year, bringing it to a level “close to, but a little above zero,” if economic conditions worsen as projected.