UPDATE 1-BoE's King says MPC, not politicians, decides on QE
(Adds Conservative spokesman)
LONDON, Nov 11 (Reuters) - Bank of England Governor Mervyn King brushed away a suggestion on Wednesday that Britain's opposition Conservatives could force a swift end to the central bank's quantitative easing policy if they are elected next year.
Conservative leader David Cameron -- on course to win an election due to be held by mid-2010 -- told his party early last month that the BoE would soon have to stop effectively printing money lest it spark inflation.
Since then, the BoE has expanded its quantitative easing policy by 25 billion pounds to 200 billion and Cameron has said he respected the central bank's independence.
Asked at a news conference whether any Conservative concerns about QE might influence policy, King said the BoE set monetary policy independently.
"Not unless the arrangements for monetary policy and the Bank of England change. Given the current arrangements, that's a matter that we decide," he told reporters.
Conservative Treasury spokesman George Osborne said in a speech at a Reuters Newsmaker event last month it was not the party's intention to interfere in monetary policy.
"Quantitative easing is a matter for the central bank," he said.
Extensions of quantitative easing require approval by Britain's finance ministry, which to date has been a formality.
King told the news conference that the BoE had an open mind about whether it would order further quantitative easing after the existing 200 billion pounds is spent by February.
He also said there was a broad recognition across the political spectrum that more fiscal tightening was needed, and that tightening beyond that announced in April's budget would affect the BoE's inflation forecasts.
In new forecasts on Wednesday, the central bank said Britain would only return to its pre-recession level of output in early 2011 and that annual inflation would probably be slightly below target at around 1.6 percent in two years' time. * For a full story on the Inflation Report, see [ID:nLB401867] (Reporting by David Milliken and Sumeet Desai; Editing by Patrick Graham and James Dalgleish)
