Mervyn King, Bank Of England Governor, Defends Quantitative Easing

Bank Of England Governor Defends Quantitative Easing

Bank of England governor Sir Mervyn King has defended a move to pump a further £75 billion into the economy at the risk of driving up inflation.

MPs on the Treasury Select Committee grilled Sir Mervyn about whether the decision to restart the quantitative easing programme would increase inflation, which hit 5.2% in September, causing more pain for cash-strapped households.

But the governor said the Monetary Policy Committee (MPC) had unanimously made the decision because they feared inflation was in danger of dropping below its 2% target looking ahead.

Sir Mervyn also came under fire for waiting too long to launch the programme, but he said the committee's view was changed by the marked deterioration in the eurozone and world economy in August.

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