Bank of England's Vlieghe warns of risks from new stimulus ideas

Credit: REUTERS/HENRY NICHOLLS

Bank of England policymaker Gertjan Vlieghe said on Monday the bank had less firepower at its disposal than it did before past recessions, but possible new options to fire up the economy in a downturn needed to be handled carefully.

LONDON, Sept 9 (Reuters) - Bank of England policymaker Gertjan Vlieghe said on Monday the bank had less firepower at its disposal than it did before past recessions, but possible new options to fire up the economy in a downturn needed to be handled carefully.

Suggestions that Britain should raise the BoE's 2% inflation target could create a higher perceived risk that the target will be raised again in the future, Vlieghe said at a policy discussion organised by the Resolution Foundation think-tank.

Also, one of the more radical suggestions for fiscal policy to create money and hand it out to the public - sometimes refereed to as "helicopter money" - could put the operational independence of the central bank at risk, he said.

(Writing by William Schomberg; editing by John Stonestreet)

((william.schomberg@thomsonreuters.com; +44 207 542 7778; Reuters Messaging: william.schomberg.reuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More