‘BoE Inflation Target on Course’ – Says Posen

The Bank of England’s (BoE) monetary policy is on course to meet its inflation target following the decision to inject £50bn of quantitative easing into the economy, according to BoE policymaker Adam Posen.

Unlike previous BoE growth forecasts, the latest set – as well as those published in November – has caused Posen to say that he is “comfortable” with the projection, and that the BoE’s inflation target can be met.

“If you look at what we’re forecasting, assuming the policy we have now put in place, that gets us close to the target with the risks pretty balanced,” Posen said. “It’s hard to complain about that if you’re an inflation-targeting central bank.”

More asset purchases to support Britain’s shaky economic recovery is a position of which Posen has been a strong advocate, and last week the Monetary Policy Committee voted to raise its purchase target by £50bn to £325bn.

Despite Posen’s position on purchasing, the new BoE forecasts – published last week – suggested that the purchases might not be extended further, because inflation was predicted to be close to its 2% target in the medium term, in spite of short-term headwinds.