Further quantitative easing could damage Britain's recovery, warns the head of the Debt Management Office (DMO).
Robert Stheeman, Chief Executive of the DMO, has said that the government-back body will be watching the Bank of England's £325bn quantitative easing programme "incredibly carefully" amidst concerns that more money printing will distort the gilts market.
When asked if quantitative easing will push up the cost of government borrowing, he conceded it "could" and added there have been instances in the past where liquidity had been affected.
Mr Stheeman said: "As long as the gilts market remains liquid and efficient, and is able to take down our supply with the minimum amount of disruption to the price formation mechanism, I'm happy.
"If we see signs that liquidity in the market is being seriously affected by the Bank's purchases, of course we would talk to the Bank. We watch their operations incredibly carefully. But so far so good."