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Bank of England's Vlieghe warns of risks from new stimulus ideas

Bank of England's Vlieghe warns of risks from new stimulus ideas
FILE PHOTO: Bank of England Monetary Policy Committee Member, Gertjan Vlieghe looks on during a Reuters Newsmaker event in London, Britain July 12, 2019. REUTERS/Henry Nicholls   -   Copyright  HENRY NICHOLLS(Reuters)
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LONDON (Reuters) – Bank of England policymaker Gertjan Vlieghe said on Monday the bank had less firepower at its disposal than it did before past recessions, but possible new options to fire up the economy in a downturn needed to be handled carefully.

Suggestions that Britain should raise the BoE’s 2% inflation target could create a higher perceived risk that the target will be raised again in the future, Vlieghe said at a policy discussion organised by the Resolution Foundation think-tank.

Also, one of the more radical suggestions for fiscal policy to create money and hand it out to the public – sometimes refereed to as “helicopter money” – could put the operational independence of the central bank at risk, he said.

(Writing by William Schomberg; editing by John Stonestreet)

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