Bank’s Adam Posen: cuts will be “quite contractionary”

The Bank of England's Adam Posen expects the impact of the Coalition's cuts as "quite contractionary". He also accused Mervyn King of being "excessively political".

Reuters report today that the Bank of England’s Adam Posen has accused Mervyn King of being “excessively political“. But the Monetary Policy Committee member went on to say that he expects the impact of the Coalition’s cuts to be “quite contractionary”.

In an exchange today with Streatham MP, Chuka Umunna, Adam Posen – a US academic who sits on the MPC – said:

“It is my personal assessment that the short-term effects of the government’s fiscal plans will be quite contractionary. That is why, in my statement to the committee, and in the last minutes on the inflation report I differed from the majority forecast of the committee”.

Watch it:

Adam Posen set hares running at the same Select Committee meeting by making an “unprecedented criticism” of the Bank Governor. Posen told MPs today:

“There was a difference of opinion at the MPC, in particular in the main meeting, over a particular paragraph in the report that was talking about the need for a particular speed with which to deal with the fiscal policy…

“A number of the people on the committee, myself plus at least one other … were concerned that that statement could be seen as excessively political in the context of the election.”

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