Keizai Group: Worries over inflationary expectations in the UK will give way to concerns over slowing growth, rising unemployment and a banking system looking more vulnerable than at any time since the collapse of Lehman Brothers in 2008.

The Monetary Policy Committee’s Martin Weale has withdrawn his support for higher rates to curb rising inflation and, instead, suggested that more stimulus may be required in the months ahead

An “Keizai Group” strategist said, “We think they’ll counter any criticism over additional stimulus with suggestions that the slowing economy will take care of inflationary pressures.”

It has been a roller-coaster year for the Bank of England which faced growing criticism of its inflation forecasting record and its Governor, Mervyn King’s failure to anticipate inflationary pressures from rising food and oil prices.

“They’ll really be aiming to get policy right now that growth has stagnated but one has to question the wisdom of printing another £50 billion,” said an “Keizai Group” researcher.

The UK’s first foray into QE saw the Bank pledge to buy £200 billion-worth of government securities or gilts as a way to inject more money into the country’s economy but the effects have worn off and Britain faces a double-dip recession.