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Bank Of England has more scope for QE - Bean

The Bank could add to its programme of asset purchases and will do whatever it can to keep the economy recovering if overseas events worsen, the bank's Deputy Governor Charlie Bean said in a newspaper interview on Thursday.

His comments added to debate over the bank's policy of quantitative easing to combat recessionary pressures, as the eurozone crisis intensifies.

"What we as policy makers can do is make it clear that if things do take a turn for the worse that we will try and do everything we can to work against that and to try and keep the recovery going. We have the scope to do more asset purchases," he told the Eastern Daily Press.

His views on the bank adding to its 325 billion pounds of quantitative easing contrast with those of fellow BoE policy maker Spencer Dale, who said on Wednesday that more QE might not be warranted even if the economy continued to struggle.

The bank suspended its programme of gilt purchases at the start of May and only one of its nine-member Monetary Policy Committee - David Miles - voted in favour of further asset buys at a meeting this month.

"We will certainly do whatever we can to try and ensure that if events beyond our shores turn out badly we can minimise the impact on households and businesses over here and try and keep the economy recovering. But it will be difficult, one can't deny that," Bean added.

He said it was reasonable to think that the recovery of the British economy would be slow and interest rates were more likely to stay low than "rocket up".

Bean gave the interview during a visit to local business leaders in Norfolk, in eastern England.

"A number of them were talking about the extent to which their margins were being squeezed and they are unable to push through price increases despite the rise in costs which often might be reflected in things like higher energy prices," he said.

"That intelligence on demand growth and inflationary pressures is a valuable input to our thinking at the bank."

British inflation fell to 3.0 percent in April, its lowest rate in more than two years, but has been above the BoE's 2 percent target for almost 2-1/2 years.

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