Prospects for the struggling UK economy have improved but the recovery is still at risk, according to the Bank of England's arch-dove Adam Posen.
Posen was a lone voice calling for more quantitative easing on the monetary policy committee until last October, when the eurozone crisis and the threat of recession prompted rate-setters to pump an extra £75 billion into the economy.
He stopped short of calling for another dose of money-printing. But during a speech in Nottingham, he dropped a broad hint that the Bank should do more.
"Things are a little better But that's not enough good news in my world to suggest we have solved the problem, though I am going through the forecast round with my colleagues."
The Bank's November forecast predicts growth of less than 1% for most of 2012, with inflation set to fall well below the central bank's 2% at the end of this year. Most economists expect the Bank to launch another round of asset purchases in February amid high chances of a double-dip recession.
In his speech, Posen said the Bank and the Government needed to do more to encourage investment to get the economy moving. He said: "A big problem for not just the UK but for all of the West is that people are reluctant to take on risky investment. In the short run, that's the real problem. Now we give people free money and they say: 'Oh good, I can pay off some debt and leave it in my bank account'."
Lost investment opportunities might mean Britain's long-term trend rate of growth was nearer the 2.2% to 2.3% it saw for most of the last century rather than its immediate pre-crisis rate of about 2.5%, he added.
