JACKSON HOLE, Wyo., Aug 28 (Reuters) - A top Bank of England policy-maker said on Saturday securities buying is an effective central bank instrument for easing financial conditions in a crisis but short-term interest rates should be the tool of choice in normal times.
'Asset purchases aimed at flattening the yield curve are probably best kept in the locker marked For Emergency Use Only,' BOE Deputy Governor for Monetary Policy Charles Bean and co-authors said in a paper presented at a conference organized by the Federal Reserve.
Bean and co-authors also said raising inflation targets from the current norm of around 2 percent does not seem a productive way to pull economies out of slumps.
'There is a risk ... that even a modest increase in the target of a few percentage points could lead to a corresponding increase in inflation volatility and associated welfare losses,' the authors wrote.
(Reporting by Mark Felsenthal, Editing by Chizu Nomiyama) Keywords: BOE/ASSETS (mark.felsenthal@thomsonreuters.com; +1 202 898 8329; Reuters Messaging: mark.felsenthal.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
'Asset purchases aimed at flattening the yield curve are probably best kept in the locker marked For Emergency Use Only,' BOE Deputy Governor for Monetary Policy Charles Bean and co-authors said in a paper presented at a conference organized by the Federal Reserve.
Bean and co-authors also said raising inflation targets from the current norm of around 2 percent does not seem a productive way to pull economies out of slumps.
'There is a risk ... that even a modest increase in the target of a few percentage points could lead to a corresponding increase in inflation volatility and associated welfare losses,' the authors wrote.
(Reporting by Mark Felsenthal, Editing by Chizu Nomiyama) Keywords: BOE/ASSETS (mark.felsenthal@thomsonreuters.com; +1 202 898 8329; Reuters Messaging: mark.felsenthal.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.