In an interview with the Financial Times, Adam Posen questioned the bank’s insistence that central banks should only buy government bonds through quantitative easing (QE).
He suggested the BoE should target measures to lift financial constraints for mortgages and small businesses.
“I have no question in my mind that what we’re doing with QE is preventing things from getting much worse, but that doesn’t mean you couldn’t have an additional or better instrument,” he said.
Posen told the paper BoE governor Sir Mervyn King could achieve a better economic recovery if the bank ditched “anguished religious ethics” over what it considered to be reasonable intervention.
Posen is leaving the BoE to head the Peterson Institute for International Economics in the US.
