LONDON: Central banks need to pay more attention to how the money supply affects inflation, the economy and their own policy-transmission mechanisms, Bank of England (BoE) chief economist Huw Pill says. Speaking separately at Chatham House in London, Haskel said that monetary and fiscal policy were not to blame for the current inflation shock. “If you’re going to look for a culprit for current inflation, at least in Europe, I do not believe we should be looking towards reckless monetary or fiscal policy,” Haskel said. “While monetarism remains unfashionable in academic and central banking circles, perhaps it has contributed more to the past, present and potential future of monetary policy than we conventionally admit,” he said. The use QE “inevitably begs the question of whether monetary quantities have re-asserted themselves in the conduct, transmission and communication of monetary policy.”Pill said the BoE would unwind its £895bil (RM4.8 trillion) of asset purchases under QE carefully, which would allow it to make the interest rate the main tool of monetary policy.
