April 19, 2012 / 12:05 PM / 8 years ago

BoE may need policy rethink unless CPI eases-Posen

LONDON, April 19 (Reuters) - Bank of England policymaker Adam Posen said on Thursday he is worried that underlying inflation pressures have not eased in recent months and said if last month’s pick-up in inflation persists, the central bank would need to rethink policy.

Posen’s comments come a day after minutes to the central bank’s April meeting showed he dropped his call for the bank to inject more stimulus into the economy, which along with hawkish comments from his colleague Paul Tucker, fuelled expectations the BoE would halt its 325 billion pound bond-buying programme next month.

Data this week showed inflation ticked up in March for the first time in six months, reinforcing policymakers’ concerns that it may take longer than they expected to fall back to its 2 percent target. In February it had forecast inflation would fall below target in late 2012.

“Of course, the inflation forecast is higher now than it was then precisely because rightly we did more QE,” Posen was quoted as saying in the Evening Standard newspaper.

“What is more challenging to my analysis, and more concerning for the economy, is that core inflation has plateaued for the last three months rather than trending down,” he said.

“If it turns out this is a short-term hang before it comes down again, great, if it turns out it’s not, then I and everybody else has to rethink something.”

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