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BoE must resume quantitative easing, says Adam Posen

The Bank has already pumped £200bn into the UK economy.

The Bank of England must continue its policy of quantitative easing and pump more money into the market to fend off threats of deflation, said Adam Posen, an external member of the Bank's monetary policy committee.

The Bank has already pumped £200bn into the UK economy.

Addressing the Hull and Humber Chamber of Commerce on Tuesday, Posen stressed that his opinions were not the Bank's but his own.

He recommended further purchases of gilts and assets such as mortgages by the Bank.

Posen said that low interest rates and stimulus measures by the Bank had an important role to play, although they alone would not secure recovery.

He argued that extreme measures are necessary as banks are depriving the economy of credit, which threatens to lower the UK's productive capacity in the long run through sustained, high unemployment.

According to Posen, such unemployment, austerity and the sense that governments were unresponsive led to the rise of extremist intolerant parties in pre-war Europe.

The policy challenge, he said, was about getting out of "a self-perpetuating negative outcome that would erode many of our children's futures."