LONDON (Reuters) – More monetary stimulus will not help the world economy return to strong growth, former Bank of England governor Mervyn King said on Monday, days before the European Central Bank is expected to decide whether to embark on a massive bond-buying programme.
In his first public speech in England since his term at the BoE ended in June 2013, King said he was concerned about a persistent weakness in global economic demand, six years on from the depths of the financial crisis.
“We should worry about that,” King told an audience at the London School of Economics, where he was once a professor.
“We have had the biggest monetary stimulus that the world must have ever seen, and we still have not solved the problem of weak demand. The idea that monetary stimulus after six years … is the answer doesn’t seem (right) to me,” he added.
Unlike the US Federal Reserve and the Bank of England, the European Central Bank has until now resisted trying to boost the economy by buying government bonds with newly created money, known as quantitative easing (QE).
But months of sub-zero inflation in the eurozone mean that many economists now expect the ECB to announce this step after its first policy meeting of 2015 ends on Thursday.