Mervyn King to face TSC grilling over QE

Bank of England governor Mervyn King has been asked by the Treasury Select Committee to explain his decision to inject a further £75m into the UK economy through quantitative easing (QE).

This month the Bank extended its asset purchasing programme for the first time since November 2009 in a bid to stimulate business growth. The total amount of money it has injected into the system now stands at £275m.

Committee chairman Andrew Tyrie said MPs want to discuss the effectiveness of the "major step" by the Bank.

"The committee will appreciate an opportunity to have an explanation for the decision from the Bank," he said.

Among the issues the MPs want to discuss are the effectiveness of QE, the case for using the same tool a second time, and the respective roles of the Treasury and the Bank in implementing measures to stimulate the economy, he said.

The Bank's Monetary Policy Committee(MPC) voted unanimously for an additional £75bn of QE at its latest meeting.

Although the MPC minutes showed some members wanted to delay QE until November, arguments for immediate action won out.

"In terms of the timing of further asset purchases, there were clear arguments for acting quickly and decisively now that the need for further monetary stimulus had become clear," read the minutes.

The TSC is to hold an evidence session with King and deputy governor Charlie Bean on Tuesday 25 October 2011 at 9.45am, in the Wilson Room at London's Portcullis House.