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More quantitative easing 'unnecessary', says expert

Monday 08 November 2010 by Gina Le Prevost

People in banking jobs may be interested to hear the opinion of one analyst that further quantitative easing would be unnecessary in the UK.

Andrew Goodwin, senior economic advisor to the Ernst & Young Independent Treasury Economic Model club, which is the only private sector body to use the same parameters for measuring the UK economy as the government, believes the country is capable of withstanding the expected "softer patch" at the end of the year.

He said his firm is of the opinion "there is sufficient momentum and another cash injection is unlikely to be required".

However, it is widely thought that chancellor George Osborne would be prepared to pump extra capital into the system if the economic recovery shows signs of faltering.

The minister said the Monetary Policy Committee has the flexibility to do whatever it thought was required to stimulate the economy, be that changing interest rates or "using any other monetary tool".

But Mr Goodwin warned that due to the UK's smaller market, intervening in private sector assets such as bonds and securities "could create a position of monopsony, which the Bank will be keen to avoid".