* Strongest supporter of asset purchases among BOE
* Sees UK growth picking up from low levels of recent years
* Says quantitative easing remains powerful weapon
LONDON, Nov 18 Britain's central bank still has
the firepower to boost a sluggish economy and has scope for
further stimulus with more asset purchases, Bank of England
policymaker David Miles said on Sunday.
"If growth does stay very weak and inflation stays low and
close to the target level there is more that we can do, we have
not run out of ammunition," he told Sky News.
"There is the scope for more quantitative easing ... it
remains a powerful weapon."
Miles has been the strongest supporter of quantitative
easing asset purchases on the Bank of England's Monetary Policy
Committee (MPC) since the departure of policymaker Adam Posen
earlier this year.
It will become clear when the MPC's latest minutes are
published on Wednesday whether Miles backed the committee's
decision earlier this month to cease further asset purchases
beyond the central bank's current total of 375 billion pounds.
Miles said the central bank was running the most
expansionary monetary policy in its history and the positive
effects would become evident.
"I expect we will see growth pick up from the very low
levels we have seen over the last year or so," he said.
He forecast the economy would eventually return to trend
growth rates, but that it would take some time.
"It may not be in the very near term, it may not be three
(or) six months, but if you look beyond that, a year, 18 months,
two years, I would expect that we will get back to more normal
rates of growth," he said.
Rises in commodity prices had hit Britons' spending power
over recent years but Miles said he was "guardedly optimistic"
that the period of sharp falls in real disposable income was
"I hope that is right, and if it is we will see consumer
spending a bit stronger over the next few years than we have
seen in the past few years," he said.
The Bank of England was able to maintain its expansionary
monetary policy because of muted growth in wages, which Miles
said he regarded as the most important domestic source of
At some stage the central bank would have to raise interest
rates and reverse some of its bond purchases, but when to do
that was a "tricky judgement" and Miles indicated that such a
move was some way off.
"It would be a mistake though to try and get back to more
normal monetary policy too quickly when the recovery that we
have seen has been pretty anaemic," he said.
Britain has not fully recovered the output lost in the wake
of the financial crisis, while the euro zone's debt problems,
government tax hikes and spending cuts to reduce the budget
deficit and banks' reluctance to lend are all weighing on the
Inflation hit a five-month high of 2.7 percent in October,
and Bank of England Governor Mervyn King warned last week that
the economy may shrink again at the end of this year, just one
quarter after it exited recession.