The Bank of England may need to extend its money printing operations next year unless the economic outlook improves, Martin Weale, a policymaker at the central bank, told the Financial Times in an interview published on Friday.
I think that if things evolve as the forecasts suggest, there will be a very strong case (to extend quantitative easing) in February, he was quoted as saying in the FT.
The Bank of England restarted its asset purchase programme in October with a 75 billion pound cash boost, and policymakers had considered pumping in even more due to the gloomy outlook for the economy.
Weale said it was perfectly possible that the economy was already contracting and added that investors were right to conclude on Wednesday that the central bank was set to pump in more than 275 billion pounds.
It would be foolish to say that there's no significant risk of output contracting, the external Monetary Policy Committee member told the newspaper.
Weale said he believed the expectation of further quantitative easing in February would have a stimulative effect immediately but added that the Bank would struggle to increase its money printing operations before then, the paper reported.
If we were to make very large purchases in any month then there's a risk that this could be a source of disruption of the orderly management of the gilt markets, he told the paper.
Weale, who became known as an inflation hawk after voting to increase interest rates every month between January and July, told the FT that if rates had been raised in spring, he would have voted to bring them down again in August.
The alternative is (if) you don't make policy changes until you're absolutely sure they are needed, then in many cases they will turn out to be too late, he was quoted as saying.
Bank of England Governor Mervyn King said on Wednesday conditions had deteriorated since August and that Britain's economy could stagnate until the middle of next year.
Fears are growing that the UK is heading back into recession after data on Thursday showed consumer confidence fell to a record low last month.
Other data this week showed unemployment in Britain hit its highest in 15 years, adding pressure on policymakers to do more to support a faltering recovery.
(Reporting by Michelle Martin; Editing by Ramya Venugopal)