LONDON, June 26 (Reuters) - The Bank of England must tackle public concern about the effectiveness of its quantitative easing programme, or risk finding its hands tied during a future economic crisis, outgoing policymaker Ian McCafferty said on Tuesday.
The BoE bought 435 billion pounds ($577 billion) of British government debt to boost the economy after the 2008-09 financial crisis and the aftermath of June 2016’s Brexit vote.
But McCafferty, who steps down in August and currently supports tightening interest rates, said he had been struck by public distrust of the programme during his visits to businesses and consumer groups in recent years.
“It seems there is a surprisingly widespread belief that QE was ineffective in a macro-economic sense, while introducing serious distortions into the economy in terms of asset bubbles and inequality,” McCafferty said.
Such views were “misperceptions”, he added.
But it was important for the BoE to tackle them and to publish more research on the effectiveness of QE asset purchases.
“I want to highlight my concern that, if left unaddressed, that distrust of QE could well limit the MPC’s scope for policy action during the next downturn,” he said
McCafferty also reiterated his view that the central bank should not “dally” over raising rates, and that a recent fall in inflation was likely to slow later this year.
Brexit was also likely to slow productivity growth, adding to upward inflation pressures, he said. ($1 = 0.7542 pounds) (Reporting by David Milliken and Andy Bruce Editing by Richard Balmforth)