The Bank of England has not ruled out more asset purchases to help Britain's economy, even if their impact has weakened, the bank's Deputy Governor Charlie Bean has said.
Earlier this month the BoE decided not to add to its £375bn of asset purchases to date, but in an interview with Bloomberg , Mr Bean said that Britain's economy was growing "weakly at best" and might shrink in the fourth quarter.
"Certainly we haven't closed the door forever on further asset purchases and it would be incorrect to say that we've decided they're ineffective at the current juncture," said Mr Bean.
"The bang for buck might be a bit less now than it was in 2009. That doesn't mean to say that you don't want to do any more of it, it just means that to get the same effect, actually you have to do even more than before," he added.
Mr Bean's comments broadly fit the tone of remarks from Sir Mervyn King and other members of the BoE's Monetary Policy Committee who addressed British legislators on Tuesday.
Paul Fisher, a BoE policymaker speaking alongside King, said Britain's economy may well need more monetary easing next year.
Two other policymakers, Ben Broadbent and Martin Weale, said they might have backed more asset purchases in November (Xetra: A0Z24E - news) had it not been for high inflation and a BoE transfer of money to the government that will provide about £35bn pounds' stimulus.
"Taken in concert with ... surprisingly dovish comments at yesterday's Treasury Committee hearing, Mr Bean's comments point to an MPC (KOSDAQ: 050540.KQ - news) ready to undertake further stimulus should the economy deteriorate," said Barclays (LSE: BARC.L - news) economist Chris Crowe.
Underlying growth in Britain was moderate, Bean said, and the sovereign debt crisis in the euro zone remained the biggest threat to Britain's economy, as well as weighing on business confidence.
This potentially weakened the effectiveness of a new BoE stimulus programme, the Funding for Lending Scheme, which offers banks cheap credit if they lend more to business and households.
"You can lead a horse to water, but you can't make it drink," Mr Bean said. "You know if they're concerned about the degree of uncertainty, and that being the dominant factor, reducing the rate that's being charged may have modest effects."
Mr Bean agreed earlier this week to serve an extra year at the BoE, until June 2014, to smooth the transition for Bank of Canada chief Mark Carney, who will succeed Mervyn King as BoE governor in July.
Mr Carney's hiring was "a bit of a coup" for Britain, said Mr Bean.
"He's an extremely impressive individual, the times I've come across him at international meetings," Mr Bean said. "He can always be relied upon to make telling, insightful contributions, so I think he will be a really fantastic governor - just the sort of person we need at the current juncture."