BoE’s Posen: King crossed the line on fiscal policy

LONDON, Nov 25 (BestGrowthStock) – Some Bank of England policymakers
felt Governor Mervyn King’s statement with the bank’s May
Inflation Report was “excessively political” in its support for
a tough austerity drive to tackle the UK’s budget deficit,
policymaker Adam Posen said on Thursday.

Posen said dissenting Monetary Policy Committee members
raised the issue with Governor Mervyn King, who has this year
offered unusually vocal support for the harsh deficit reduction
plan adopted by the Conservative-Liberal Democrat coalition.

Posen said the majority of the MPC was comfortable with the
language in the statement, which was published after Britain’s
May 6 parliamentary election.

“There was a difference of opinion at the MPC, in particular
in the main meeting, over a particular paragraph in the report
that was talking about the need for a particular speed with
which to deal with the fiscal policy,” Posen told lawmakers.

“A number of the people on the committee, myself plus at
least one other … were concerned that that statement could be
seen as excessively political in the context of the election.”

One of the big issues in the May election was how swiftly
the record budget deficit needed to be dealt with. Labour, in
power for 13 years until May, had argued for a slower pace of
spending cuts to help Britain’s economy get back on track after
an 18-month recession.
(Reporting by Matt Falloon; Editing by Susan Fenton)

BoE’s Posen: King crossed the line on fiscal policy