Posen says fiscal, monetary policies working

The Bank of England's Adam Posen was quoted on Tuesday as saying Britain's fiscal and monetary policies were a success, but that it was working on a "Plan B" in case its quantitative easing fell flat.

The Monetary Policy Committee (MPC) member told the Daily Mail the country was not facing a deflationary scenario, nor a Japan-style lost decade, but it "could be a slower few years."

He said the eventual end to QE could lead to some "volatility" in the gilts market, but added: "Even with the huge purchases the Bank of England made over the last nine to 10 months, it's such a deep and liquid market that our ceasing to purchase, if we do, will not have more than a transitional effect.

"There is no lack of demand for UK gilts."