... while Bank economist admits the dangers of QE

QUANTITATIVE EASING could result in unwanted asset bubbles that could prove &ldquo;costly to rectify&rdquo;, the Bank of England&rsquo;s chief economist and monetary policy committee member Spencer Dale said yesterday.<br /><br />Speaking in Exeter, Dale said he was concerned by the uncertainty surrounding the effects of quantitative easing.<br /><br />&ldquo;We do not have much experience of conducting monetary policy via asset purchases and there is a risk that their effects will be transmitted through the economy in ways we do not predict and do not want,&rdquo; he said. <br /><br />However, he said that asset purchases had played an important role in improving the rate of growth in the money supply and the decline of corporate bond spreads. <br /><br />Dale was one of the six MPC members that voted for a smaller increase of &pound;50bn in asset purchases. Three others &ndash; including governor Mervyn King voted for a rise to &pound;200bn. <br /><br />The Bank of England has called an unprecedented meeting of the City&rsquo;s economists next Tuesday to clear up the confusion surrounding QE and perhaps end speculation that the banks will be charged to hold reserves at the central bank. <br />