Posen's depression alarm

29 September 2010 By Ian Campbell

Adam Posen has called for more quantitative easing. The member of the Bank of England monetary policy committee’s fears of a slump cannot be easily dismissed. But policy is different from the 1930s and protectionism has been avoided so far. More QE should remain on hold for now.

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Adam Posen, a member of the Bank of England's monetary policy committee said that "further [quantitative] easing should be undertaken," in a speech on Sept. 28.

Posen said that his assessment "rests upon the path of postcrisis developments having been broadly consistent with these past patterns as seen in Japan in the 1990s and in the United States and Europe in the 1930s."

Posen nonetheless said that he was not certain to vote for more QE at the bank's October monetary policy meeting.

Andrew Sentance, the only member of the MPC to vote against unchanged monetary policy in recent months, said on Sept. 28 there was no need to restart quantitative easing.

In an interview with the Nottingham Post, he said: "we should be preparing the ground for gradually increasing interest rates in a measured way to reflect the fact that the economy has improved and the inflation situation is not where we would like it to be."

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