Tuesday, Bank of England's Monetary Policy Committee member, David Blanchflower said the 'one-tool one-target' approach to monetary policy of using Bank Rate to target consumer price inflation has been inadequate and inflation targeting alone will not suffice.

This approach was insufficient in dealing with failing banks and financial market stress. There is now a consensus that new tools are required to regulate the financial sector and prevent such crises in the future, Blanchflower added. Monetary policy and financial stability are too important.

He noted that dis-inflationary pressure is clearly evident and the conditions in the labor market continue to weaken. Many firms are now reporting wage freezes as activity contracts further and unemployment and redundancies rise. So an accommodative monetary policy stance is likely for the foreseeable future, Blanchflower added.

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