Weak British gross domestic product data this week strengthens the case for more Bank of England stimulus, but this has to be weighed against above-target inflation, BoE policymaker Martin Weale said today.
Revised official data this week showed that Britain's economy contracted by 0.3 per cent in the first quarter, a bigger fall than the earlier -0.2 per cent estimate.
After the first estimate was released, Mr Weale said it strengthened the case for more BoE asset purchases - though he did not vote for more at May's Monetary Policy Committee meeting.
Asked in a BBC interview about his reaction to the latest data revision, Mr Weale said it confirmed his view that British economic output had been flat or falling slightly for a while.
"I said when those (preliminary Q1 GDP) figures appeared that I thought they strengthened the case for further support for the economy, for further asset purchases," he said.
"At the same time, of course, we have to remember that although we had recent good (inflation) news ... nevertheless the inflation rate is 3 per cent rather than 2 per cent and it's been above target for quite a long time.”
Separately, Mr Weale said that he was "sure" Britain could withstand the impact of a possible Greek exit from the euro zone, based on what it had survived over the past 100 years.
He did not want to be drawn on alternative stimulus to buying gilts, but said the transmission mechanism from lower gilt yields to other asset prices was "much murkier".
Reuters
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