Speaking at an event in London, Charles Bean signalled that an extension of the Bank's 200 billion money purchasing programme may be on the cards if the European sovereign debt crisis engulfs the UK economy.
He said: "It is certainly possible we may well want to undertake a second round of quantitative easing if there is a clear sign that UK output growth and with it inflation prospects are slowing.
"There are very significant downside risks, particularly from the eurozone sovereign debt crisis. If that unfolds in an unhappy fashion, I think it is quite plausible that it would have a significant adverse impact on the UK."
Earlier this month, the British Chambers of Commerce (BCC) called on the Bank to "act forcefully" in 2011 if the economy runs into further trouble.
While GDP growth has so far exceeded expectations this year, most economists predict the economy will run into headwinds in the early part of 2011.
David Kern, BCC chief economist, said the Bank "must stand read" to extend QE by 50bn in the early months of next year if the economy starts to falter.
Until recently, it appeared a "pause" button had been pressed on QE while the Bank also kept interest rates at their historic low of 0.5 per cent. But Bean yesterday appeared to suggest policymakers would act decisively if economic conditions worsen.