Bank of England could print more money to tackle deflation, says Treasury
Government fears move could be necessary to stop inflation dipping below 2% target
The Bank of England building in central London. Photograph: Toby Melville/Reuters
The Treasury today signalled it could be necessary for the
Bank of England to print more money to deal with the threat of deflation.
With the British economy in recession and interest rates at an all-time low, the government fears the move could be necessary to stop
inflation dropping below its 2% target.
Asked about the prospect of what is know in economic terms as quantitative easing – turning on the printing presses to literally print more cash – a Treasury spokesman said: "It would be prudent to consider all the options."
The decision to do so would be taken by the Bank of England, following consultation with the chancellor.
The spokesman added: "It is something the bank would discuss with us, and they have not done so, so far, but it is reasonable for everyone to be thinking about this with the low interest rates at the moment."
The spokesman said that, as with interest rates, the announcement would come from the Bank of England so the chancellor would not necessarily have to make a Commons statement on the matter – meaning an announcement could be made after parliament has risen for the Christmas recess.
"The chancellor wouldn't have to make a statement about it but it is something he would take a great deal of interest in," the spokesman added.
"Increasing the supply of money is one of the many policy levers the bank had to target inflation."
The spokesman said that, as with interest rates, the announcement would come from the Bank of England so the chancellor would not necessarily have to make a Commons statement on the matter.
The spokesman said: "The chancellor wouldn't have to make a statement about it but it is something he would take a great deal of interest in.
"Increasing the supply of money is one of the many policy levers the bank had to target inflation."
