Monetary Policy Committee member David Miles has argued that quantitative easing is still effective and should be expanded despite concerns it had little effect.

Mr Miles was speaking to delegates at the Society of Business Economists’ annual conference in London yesterday.

Mr Miles is currently the only member of the Bank of England’s Committee who favours an increase in the programme to £350bn.

The reasons he gave for his opinion were that there was ongoing economic weakness, poor labour productivity and weak GDP growth.

He said: “I believe they are consistent with the evidence and that they make an exceptionally expansionary monetary policy appropriate.

“No-one on the MPC feels comfortable with the prolonged and substantial overshoot of inflation above its target level. But that does not mean bringing inflation back to target very rapidly is the best thing to do.”

While inflation fell this week to three per cent, it is still above its two per cent target and the Committee does not expect it to reach this target until mid-2013.

Mr Miles does not think the Committee should rush to bring inflation down quickly but rather should focus on expansion.

Mr Miles said: “A lot of spare capacity is needed to reduce inflation quickly and a lot of spare capacity means underutilization of capital and more unemployment, which is costly in terms of welfare. On the other side, stimulating demand will put less pressure on inflation.

“So the price of bringing above-target inflation back down quickly is high, while the cost of more expansionary policy-which means a slower trajectory of inflation coming back to target- has fallen.”

The next Committee meeting will be held on 6-7 June.