BOE Has Scope For More QE to Support Economy, Ramsden Says
The Bank of England in the City of London, U.K. (Photographer: Jason Alden/Bloomberg)

BOE Has Scope For More QE to Support Economy, Ramsden Says

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The Bank of England has more scope to increase its bond-buying program to stimulate the economy, a key policy maker said, a sign that officials may be reluctant to push borrowing costs below zero.

Deputy Governor Dave Ramsden said the central bank could review some of its own constraints on purchasing U.K. government bonds in financial markets to boost the program known as quantitative easing. While the BOE doesn’t rule out negative interest rates, he said QE is a “tried and tested tool.”

The remarks also suggest the central bank isn’t ruling out adding more stimulus despite its own expectations of a strong rebound driven by the U.K.’s aggressive vaccination campaign against the coronavirus.

“It remains appropriate for policy to lean strongly against downside risks to the outlook,” Ramsden said Wednesday in a speech to the University of Birmingham’s economics department.

U.K. bonds extended their advance after the remarks, sending the yield on 10-year bonds five basis points lower to 0.57%.

The BOE in November voted to increase its QE program by 150 billion pounds ($208 billion) of purchases during 2021 and recently has been buying at the rate of 4.4 billion pounds a week.

“If we continued at that pace, the program would be complete at the start of November 2021,” Ramsden said. “For that reason, and assuming no material worsening in market function, I would envision some further slowing in the pace at some point in the year.”

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