Adam Posen urges BoE to ‘think private’ and change asset purchase focus

Bank of England policymaker Adam Posen has urged the central bank to start buying private assets such as bank loans, and not just government bonds, to kick-start the ailing economy.

Posen, who was the sole member of the nine-strong monetary policy committee (MPC) to consistently vote for quantitative easing (QE) throughout most of last year, abandoned his call for more gilt purchases at the MPC’s meetings in April and May.

Earlier this month, the MPC held the current stock of QE at £325 billion, confounding some analysts’ forecasts that it would embark on an additional £25bn round of money printing.

In a speech yesterday, Posen said he was “too optimistic” when he voted to keep QE steady in recent months.

He added: “I believe it is time for the central banks, including the Bank of England, to engage in purchases of assets other than government bonds.”

The International Monetary Fund has said the MPC should look to buy bonds issues by companies in a bid to increase the flow of credit, but BoE governor Sir Mervyn King has so far rejected this course of action, saying the government should take such decisions.