Could US policy force the Bank of England to print more pounds?

If the US decides to do more to stimulate its economy that will put extra pressure on the Bank of England to do the same here.

With inflation almost non-existent in August and consumer confidence dropping like a stone there is a growing certainty in the stock market that the US Federal Reserve may soon be ready to do more to stimulate the world's largest economy.

The meeting this Tuesday is the last Federal Open Market Committee monetary policy will have until November, which is partly why speculation about what it will say and do has been so intense.

Stephen Hull, economist at Morgan Stanley, said: 'Over the past few weeks, risk assets [shares, bonds] have probably been helped by a combination of the Fed being ready to act if necessary and indications that the worst of the negative growth surprises are perhaps behind us.'

Bank of Japan's two trillion yen spending spree on dollars is also likely to add to concern that US policy makers can't rely on dollar weakness to lift output.

Which means the interest rate setters will have no choice but to start a second round of stimulus measures.

And since that would weaken the dollar that inevitably raises questions about how far sterling could rise before the Bank of England begins to revise its growth forecasts again and considers starting the printing presses here.

With monetary policy committee member Adam Posen telling a meeting in Washington that the Bank would probably do more targeted easing next time, for example buying private debt in specific sectors, it is not surprising that people are talking about how soon there will be more quantitative easing.

But while that fear is growing it seems unlikely that central bankers will move just yet.

As ING economist Rob Carnell points out: 'The data (in the US ) is still largely consistent with a slowdown in growth rather than a collapse in economic activity.'

Although he believes that policymakers will be increasingly nervous about the risks of deflation he says it is too soon to make a pre-emptive strike.

Here, of course, the issue facing the central bankers is very different. Our own inflation numbers also showed that despite all this talk of the coming austerity and confident comments about inflation falling back, inflation has remained well above target for yet another month.